In March 2024, the United States recorded the largest always trade deficit of USD 163,5 billion, despite the imposition by the Donald Trump administration of advanced tariffs on goods from China and another countries. Data show that, alternatively of reducing imports, Washington's actions caused chaos in global supply chains, accelerated the economical slowdown and forced companies to look for more costly replacements in Asia.
Deficit grows despite customs
Application in March 20% of the duties on all Chinese imports (and then even 145% on selected products) was to reduce the dependence of the USA on China. However, imports from China fell by 7% (to US$29.4 billion), but companies have massively moved orders to another Asian countries:
Vietnam – increase of imports by 23% (up to US$14.8 billion),
India – growth by 34% (up to USD 11.2 billion),
Thailand – growth by 46% (up to USD 7 billion).
Effect? US trade deficit with these countries broke records, e.g. with Vietnam increased by 24% (up to $13.5 billion). – “Customs have begun to operate, but companies have simply fled China to another countries that frequently offer more costly products” – comments Matthew Martin of Oxford Economics.
US economy suffers, investments frozen
Import leap (about 5.4%, up to US$346.8 billion) stemmed from attempts to avoid future duties, but besides disrupted the economy. In the first 4th of 2024, US GDP decreased by 0.3% – this is the first recession since 2022. – “Commercial uncertainty paralyzes investment. Companies hold their decisions due to the fact that they do not know what duties will be imposed for a month.” – adds Martin.
Chinese opposition and fresh barriers
China responded to US duties 125% stake on goods from the USA and export restrictions on key minerals for industry. Beijing announced that “never kneels” Before Washington, although he's open to conversation. Meanwhile, Chinese factories are already suffering from a decline in export orders and a hazard of dismissal.
Perspectives: more customs, little stability
Experts inform that even if the U.S. negociate trade agreements, Base rate 10% per country (pronounced for alleged “The Day of Liberation” 2 April) may keep inflation and weaken demand. – “ASEAN will lose its share of the US marketplace due to the fact that customs will hit their exports” – says Priyanka Kishore of Asia Decoded.
Instead of protecting American industry, Trump's administration has led to:
Record trade deficit,
Economic slowdown,
Transfer of supply chains to more costly suppliers.
Effect? Companies pay more, consumers lose and the economy slows down.
Source:
- Nikkei Asia: “US trade deficit hits evidence as Asian imports spice in March” (https://asia.nikkei.com/Economy/Trade/US-trade-deficit-hits-record-as-Asian-imports-spike-in-March)
- Data Commerce Department/Bureau of economical Analysis (USA)
- Economists' comments: Oxford Economics, Asia Decoded.
Leszek B. Glass
Email: [email protected]
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