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— This is the script of CNBC's news report for China's CCTV on September 6, 2018, Thursday.
When Trump authority is busy on launching trade war with its trade partners, the latest data shows this trade friction is a backfire to the white house. Trade deficit in June shows a 2nd straight expanding, increasing to a 5-month high.
And this increase is the highest in 3 years. Additionally, from the perspective of trading countries and regions, trade deficit with China surged 10 percent to a record $36.8 billion. The trade gap with Mexico narrowed 25.3 percent to $5.5 billion while the shortfall with Canada shot up 57.6 percent to $3.1 billion. The trade deficit with the European Union soared 50 percent to a record high of $17.6 billion.
Analyze form imports and exports: we can see the growing trade deficit between US and its major trade partners, because the retaliatory tariffs policy launched by trade partners slaps US exports. Among that, Soybean exports dropped $0.7 billion and shipments of civilian aircraft decreased $1.6 billion
In July, exports fell 1.0 percent to $211.1 billion. Imports increased 0.9 percent to a record $261.2 billion, because of increased petroleum price.
In July, US petroleum imports reached $20.3 billion, was a 4-year high. Because the price of imported crude oil averaged $64.63 per barrel in July, up from $62.42 in June. In addition, there were also increases in imports of automobiles and parts, as well as computers and computer accessories.
US trade deficit in the first 7 months has reached $33.8 billion, greater than $316 billion in last year, with a 7% gain, so concerns about increasing trade friction is warming up, and some analysts who discussed that with us recently also against Trump's tariffs policy, suggesting that trade could be a drag on economic growth in the third quarter. And if the trade environment continues to deteriorate, that could be a drag and strain on the U.S. economy. For example, David Wessel, an economist at the Brookings institution told CNBC that
Trump's tariffs policy only works in 100 years ago, because at the time, the federal government was able to get most of its revenue through tariffs because the economy was much smaller and did not have trillions of dollars in spending programs. However, currently, along with the expansion of the US fiscal deficit, the decline in private savings rates and the rise in the US dollar exchange rate, led to a further increase in imports during the recovery phase.
Historical data tells us, trade deficits may be difficult to decline through tariffs. And the data released overnight further confirmed that. We will keep an eye on this issue.