Global Economy: US Trade Deficit With EU Rises To Record $178 Billion

The U.S. trade deficit with the European Union rose to a record high of $178 billion in 2019, from $169 billion a year earlier, the U.S. Department of Commerce said Wednesday. The Trump administration has tried to decrease the U.S. trade deficit with other countries, as part of the President’s “America First” agenda.

Trump has frequently criticized EU trade policies, claiming that the U.S. is burdened by the deals. He has stated that the Euro is undervalued against the dollar and has threatened tariffs on cars assembled in the EU, which would hurt European automakers financially.

Trump said in January that he would implement the automobile tariffs if the EU doesn’t reach a new trade deal. Treasury Secretary Steve Mnuchin also said the auto tariffs could punish European countries that impose a digital tax on U.S. tech companies.

At the same time, the Commerce Department reported that the U.S. trade deficit with China shrank in 2019 to $345.6 billion, down from $419.5 billion the year before. Trump increased tariffs on Chinese goods in 2019, with trade tensions high for much of the year.

The U.S. and China signed onto a “Phase 1” trade deal in January, which would force Beijing to buy $200 billion in American agricultural and manufactured goods over the next two years. The U.S. would call off its planned tariff increases as part of the agreement.

Trump believes that tariffs can help invigorate U.S. manufacturing but they have had adverse effects on various sectors of the American economy. In his State of the Union speech Tuesday night, Trump said that “unfair trade is perhaps the single biggest reason I decided to run for president.”