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Expand chart
Data: U.S. Dept. of Commerce; Chart: Chris Canipe/Axios

President Trump's trade war has led to even bigger trade deficits with China, even though it was intended to improve the trade balance. But it's not just China — the deficit has increased with most of our other major trade partners, too.

Why it matters: While economists agree that trade deficits aren't a good way to measure a trade relationship, they are the metric Trump fixates on, made campaign promises about and uses to evaluate relationships with other countries.

  • Throughout his campaign, Trump vowed that he would wipe away the U.S.'s trade deficits: "You will see a drop [in the trade deficit] like you’ve never seen before.”

Reality check: Among the U.S.'s 15 biggest trading partners, the trade balance has moved in the wrong direction for Trump in 10 of those countries between 2016 and 2018, while the aggregate trade deficit has jumped from $503 billion to $628B.

  • While Trump can explain the deficit spike with China as a short-term sacrifice for long-term benefit, it doesn't account for the wider trend.

The latest: The U.S. trade deficit in the first 6 months of 2019 is even bigger than in the last two years.

What's going on: Trump's tax cuts are as much to blame for the increase in the trade deficit as anything else, writes Axios Markets editor Dion Rabouin:

  • More money in Americans' pockets leads to more consumption, often of Chinese-made goods.
  • The tax cut helped boost the value of the dollar, which makes imports to the U.S. relatively cheaper.

The big picture: Trade deficits mean we buy more from a country than they buy from us, but that doesn’t necessarily mean the relationship is unfair, writes Axios business editor Dan Primack.

  • For example, you have a “trade deficit” with your local grocery: you give them money and get food in return.

Between the lines: Despite the dubious merit of the trade deficit as a useful barometer of the health of a trade relationship, Trump's obsession with the number has led to strained relations with key allies.

  • As Axios' Jonathan Swan reported in 2017, the trade deficit is one of the items he always wants to be briefed on before meeting with a foreign leader.
  • Trump picked a fight with Justin Trudeau over the trade balance, later acknowledging that he made up numbers in arguing that the U.S. has a trade deficit with Canada. It has a surplus.
  • Coupled with immigration, the trade deficit has been a major source of Trump's animus toward Mexico.
  • It led Trump to threaten auto tariffs on Europe.

Go deeper

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The top Republicans in the House and Senate told reporters after meeting with President Biden at the White House that "there is a bipartisan desire to get an outcome" on an infrastructure package, but stressed that revisiting the 2017 tax cuts is a "red line."

Why it matters: Wednesday marked the first time that Biden has hosted Senate Minority Leader Mitch McConnell (R-Ky.) and House Minority Leader Kevin McCarthy (R-Calif.) at the White House.

McCarthy: "I don't think anybody is questioning the legitimacy" of Biden's win

House Minority Leader Kevin McCarthy (R-Calif.) was asked Wednesday whether he was concerned about elevating Rep. Elise Stefanik (R-N.Y.) to GOP leadership after she has promoted baseless claims about the election. He responded: "I don't think anybody is questioning the legitimacy of the presidential election."

Why it matters: Rep. Liz Cheney (R-Wyo.) was ousted as House GOP conference chair earlier Wednesday — in a vote that McCarthy supported — over her continued criticisms of former President Trump and his lies about election fraud.

Updated 2 hours ago - World

Gaza crisis: Casualties pile up with no signs of ceasefire from Israel, Hamas

Palestinians in the Gaza Strip leave their neighborhood on Wednesday following an explosion. Photo: li Jadallah/Anadolu Agency via Getty Images

Tel Aviv — With Israel and Hamas now engaged in their most destructive fight in seven years, the Biden administration is dispatching a State Department official to join the de-escalation efforts.

The latest: The Israeli air force attacked a meeting of senior Hamas military leaders on Wednesday in Gaza and reported it had killed the Gaza City Brigade commander and the heads of Hamas’ cyber arm and weapons research and development department, along with at least three other senior officials.