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Illustration: Sarah Grillo/Axios

The U.S. trade deficit — how much the country buys from abroad, versus how much it sells — rose to a 10-year high last year. And economists surveyed by Axios say there's only one certain way that President Trump can achieve his cherished aim of slashing it: push the economy into recession.

Driving the news: The 12.5% jump in the 2018 trade deficit, reported today by the Commerce Department, is the result of a growing economy, stimulated by Trump's tax cuts, economist agree, and not something amiss.

  • That also goes for a record jump to a $419.2 billion deficit with China, up 11.6% over 2017.
  • "People buy more, which means, in turn, that they import more. If you want to reduce the trade deficit, have a recession. Look at 2009," says William Reinsch, a senior trade adviser at the Center for Strategic and International Studies.
  • Of course no one wants a recession.

The background: Trump is conducting a multi-front trade war, the main purpose of which is to push down the country's global trade deficit, which he calls unfair and bad for Americans. Although most mainstream economists disagree — trade deficits reflect economic health, not malaise, they say — cutting the gap is a pillar of Trump's presidency.

By the numbers:

  • The annual U.S. trade deficit surged to $621 billion in 2018. For December alone, there was an 18.8% jump. In both cases, the gaps are the largest since October 2008.
  • The gap was 3% of GDP, up from 2.8% in 2017. "It’s still significantly smaller than in the decade before the Great Recession, when it approached 6%," reports Bloomberg's Katia Dmitrieva.
  • The annual gap is up by $119 billion since Trump became president. But, if you go by economic orthodoxy, that's an issue only because he has emphasized it.

"Trump is over a barrel because he has made reducing the trade deficit a measure of his success in trade policy. And by that measure he is failing," said Edward Alden, a senior fellow at the Council on Foreign Relations.

A thought bubble: Trump has voiced his view on debt for decades. His obsession doesn't mean he is taking the U.S. into recession, but that — if he wants a materially lower trade deficit — he needs to hope for one. Or to pile burdens on the economy that take the country there.

The numbers on China have especially worsened, putting Trump in a difficult political position:

  • The Chinese goods deficit is the largest ever recorded.
  • But a new trade accord with Beijing is coming: At the scale some have reported — $1.2 trillion in imports of U.S. goods over six years, or two-thirds more than 2018 spending — the agreement, if fully enacted, would reduce the deficit substantially.
  • "The real question there is whether the U.S. economy can actually produce that much more stuff," Reinsch said.

The bottom line: As of now, the relatively robust U.S. economy is staving off recession for the rest of the world. The widening trade deficit lowers 2018 GDP growth to 2.9%, 0.3% below previously reported, and that's likely to be the peak before the next economic downturn, says Joseph Brusuelas, chief economist at RSM.

  • The next step is unhappiness: "The trade balance will turn when the U.S. economy sags," said Gary Hufbauer, a respected trade expert with the Peterson Institute for International Economics. "I doubt there will be cheers when that happens."

Go deeper

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Computer model projection showing the intense storm off of Cape Cod on Jan 29, 2022, with heavy snow and strong winds lashing the coastline. (Weatherbell.com)

Blizzard warnings are in effect for 11 million people from coastal Virginia to eastern Maine as a historic winter storm is set to slam the Mid-Atlantic and Northeast beginning Friday.

Why it matters: The storm will bring hazards ranging from zero visibility amid hurricane force wind gusts and heavy snow, to coastal flooding that will erode vulnerable beaches and threaten property from the Jersey shore to coastal Massachusetts.

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Omicron dashboard

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  2. Vaccines: Pfizer begins clinical trial for Omicron-specific vaccine — The shifting definition of fully vaccinated.
  3. Politics: Virginia AG says public colleges can't mandate COVID vaccines —Alaska governor joins Texas lawsuit over National Guard vaccine mandate — Navy discharges 45 sailors for refusing vaccine — Spotify to remove Neil Young's music after his Joe Rogan ultimatum — White House: 60M households have ordered free COVID-19 rapid tests.
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Biden will move U.S. troops to Eastern Europe "in the near term"

President Biden boards Air Force One at Joint Base Andrews on Jan. 28. Photo: SAUL LOEB/AFP via Getty Images

President Biden said on Friday he plans to move U.S. troops to Eastern European and NATO countries “in the near term.”

Driving the news: “Not too many” U.S. troops, Biden added in remarks to reporters at Joint Base Andrew upon returning from a trip to Pennsylvania.