WASHINGTON-U.S. exports have become “one of the chief victims” of U.S. President Donald Trump’s trade conflicts, a veteran economist said, noting that the president’s tariffs have severely undermined his goal of reducing the trade deficit and strengthening the economy.
In an article published Friday, Fred Bergsten, senior fellow and director emeritus at the Peterson Institute for International Economics, said Trump’s tariffs have damaged U.S. sales abroad in several ways, the first of which is cutting imports.
“Many U.S. exports depend on imported inputs. Tariffs thus lead to higher costs for exports, raising their prices,” said Bergsten, member of the Advisory Committee for Trade Policy and Negotiations under the Office of the U.S. Trade Representative.
Second, Trump’s import barriers trigger foreign retaliation that cuts U.S. exports directly, and agricultural sales have been hit particularly hard, he said, citing the examples of Europe, Canada, Mexico, Turkey and China, among other trading partners.
Third, the administration’s macroeconomic policies have “added to exporters’ woes,” as the sharp increases in the U.S. budget deficit have kept U.S. interest rates considerably higher than they would otherwise be, which further strengthens the exchange rate of the dollar, depressing foreign markets for U.S. goods and services even more, said Bergsten, who also served as assistant secretary for international affairs of the U.S. Treasury Department.
The veteran economist went on to point out that the “huge uncertainties” surrounding Trump’s trade policies and foreign reactions to them “discourage” exporters from making the investments needed to improve their competitiveness and expand their markets.
“Finally, and perhaps most importantly, exporters can be successful only if they are viewed as reliable suppliers. But Trump’s trade policies have rendered U.S. firms among the most unreliable in the world,” he said, adding that the administration has done “virtually nothing” to support exports.
U.S. goods and services deficit recorded 55.2 billion dollars in June, and year-to-date, trade deficit increased 23.2 billion dollars, or 7.9 percent, from the same period in 2018, the Commerce Department said Friday.
“Unless the president reverses course, his trade policy will continue to weaken rather than strengthen the U.S. economy as well as undermine the global trading system,” Bergsten said.