Trump hit roughly half of Chinese imports with taxes previous year, a move created to kickstart trade negotiations with the goal of increasing exports to that country and stopping the forced turnover of USA technology and theft of intellectual property.
The President thus begins his re-election drive with a core campaign promise unfulfilled - and with a recent flurry of economic research showing that his embrace of tariffs is damaging the USA economy.
Trump persists with the import levies even as some supporters push for him to also act on other forces fuelling the trade deficit, including a robust dollar. Consumer goods imports jumped $2.4 billion, boosted by a $0.7 billion increase in imports of household and kitchen appliances. "You can't tariff it away".
The bulging deficit numbers come as USA and Chinese officials say they are nearing a breakthrough in talks to end their trade war.
There are a few takeaways from this news, including that trade was probably a bigger drag on growth last year than previously forecast.
The high dollar acts as a price increase for American exporters, making it harder to compete with foreign rivals. He called the trade deficit "unacceptable".
"We find that the USA tariffs were nearly completely passed through into USA domestic prices, so that the entire incidence of the tariffs fell on domestic consumers and importers up to now, with no impact so far on the prices received by foreign exporters", according to the report. Summers, along with other economists, has also challenged Trump's approach to addressing the perceived problem by adding tariffs, pointing out that these levies primarily negatively affect USA consumers.
President Trump came into office saying America was getting the bad end of deals around the world.
Trump's supporters insist he's tackling that via his trade negotiations with China and other United States trading partners. "We can turn it all around - and we can turn it around fast", he said. Trump is trying to reach a new trade deal with China and hopes to strike an agreement with President Xi Jinping in the coming weeks, but the stakes could not be higher.
Trump has used tariffs or import taxes more aggressively than any American president since the 1930s. "When things are booming we consume more imports". Consumers have more money to spend, which means they demand more stuff, and companies have ramped up their imports to satisfy that demand. "I think in agriculture, we're really concerned", Brian Duncan, vice president of the Illinois Farm Bureau, said Monday during a panel discussion hosted by the University of Chicago's Institute of Politics.
That has been exacerbated by the tariffs, which have not only been blunted by the currency relativities but have been largely absorbed by United States companies or passed on to U.S. consumers in the form of higher prices.
The study also found sizable costs relative to any expected benefits.
"Many Pennsylvania farmers and manufacturers have already been harmed by tariffs".
EU Trade Commissioner Cecilia Malmstrom is in Washington this week and due to meet later Wednesday with US Trade Representative Robert Lighthizer as they prepare for formal negotiations.