Not Winning: Collapse in Global Trade Escalates, Imports -2.7%, Exports -4.0%


Those who claim that Trump has already won or is sure to win the trade war need to ponder actual trade results.

Exports rose 1.0% in March with imports up a reported 0.9%. That progress was taken away and then some in April.

The Census Bureau Advance Trade report shows the balance of trade widened by 0.3%. The details, as noted by Econoday are downright ugly.

Sharp declines in exports are unwelcome headlines in April's advance data on goods trade. The monthly deficit remains very deep, at $72.1 billion with exports falling 4.2 percent year-on-year and with imports also down, 2.7 percent lower. The deficit compares unfavorably with a $71.3 billion monthly average in the first quarter that marks a weak opening for net exports in the second quarter.

Capital goods are the US's largest exports and these fell 6.5 percent in the month to $44.3 billion. Compared with April last year, capital goods exports are down 3.7 percent. Auto exports are also down, 7.2 percent lower to $12.9 billion and 6.7 percent below last year. The only export component showing a gain is food & feeds which rose 0.5 percent to $11.2 billion but which is nevertheless 6.2 percent below April last year.

The decline on the import side is also led by a 3.5 percent decline for capital goods ($55.4 billion) but also includes 3.1 percent and 2.3 percent monthly declines in autos ($30.9 billion) and consumer goods ($54.2 billion) as well as a 1.1 percent drop in foods ($12.8 billion).

Global trade figures have been contracting and the latest US numbers are part of that picture. Today's report gets second-quarter GDP, already held down by contractions for April retail sales and industrial production, off to a slow start.

Note that country balances aren't posted with the advance report but will follow with the subsequent international trade report that will also include data on services.

Evaluating Winning Claims

Yesterday, I saw yet another claim that Trump is winning the trade war.

Last week, I saw claim that Trump "already" won the trade war.

A third person claimed this is all part of 3-D outmaneuvering and that Trump has more resolve than China.

Not Winning

This is not winning and it will never be winning.

  1. Trump changes his mind every month, if not week, yet he supposedly has more resolve. Yeah, right.
  2. Trump, a proven piss poor negotiator, is somehow supposed to negotiate magically.
  3. Trump has an election to win. The Chinese leader, Xi Jinping, doesn't.
  4. Trump is a braggart who demand the other side admit Trump's prowess.

Dealing With Trump

North Korea figured out how to deal with Trump.

Kim Jong Un gave Trump false praise while knocking Joe Biden.

Problem for China

The problem for China (and the US), is Trump demands China give in on "core" principles.

At that point China walked away. China had no other choice.

Pain Game

Mathematically, the US can likely inflict more pain on China. It is always the case that importers like the US can place more tariffs than vice versa.

But since when does losing less constitute winning?

Rare Earths

China does have some serious ways to strike back such as blocking Rare Earth Elements used in weapons, magnets, cell phones, and other sensitive devices.

Once again,we have seen superficial commentary that rare earths are not really rare (a true statement) thus the US can get other suppliers (a falsehood).

The problem is rare earths are extremely polluting and one does not exactly start a mine overnight. We went through this once before and recall what happened.

  1. China reduced supply of rare earths
  2. Rare earth prices skyrocketed
  3. New sources came into production within a couple years
  4. Price crashed
  5. China further flooded the markets
  6. The new Western sources lost money and went out of business.

This is not exactly winning by either side, but the position is the same as before: China supplies 80% of the production as no countries other than China are willing to deal with the toxic, radioactive sludge that producing rate earths entails.

Meanwhile, us weapons manufacturers, cell phone makers, etc. need these rare earths.

For further discussion, please see Trade Hardball: China Threatens to Cut Off US Supply of Rare Earth Elements.

Those who downplay the rare earth angle because there is plenty of "supply" have not thought things through.

Yes, it is a short-term thing. But it's short-term pain for the US at election time.

Bond Market, Stock Market

The bond market, the stock market, and the global trade numbers all tell the same story: Trump isn't winning.

A Full-Blown Trade War is Now the Base Case.

Trade War Over Quickly?

The joke of the week, last week was Trump's blowhard comment Trump Says "Trade War Could be Over Quickly".

I asked: Why should anyone believe Trump?

The only way the trade war will be over quickly is if Trump, not China, caves.

Recession Warning

Meanwhile, the yield curve flashes a bright red recession flag.

Good luck with that.

Mike "Mish" Shedlock

Comments (17)
No. 1-10

oh come on Mish, dont blame it all on poor Trump and the so called trade war ! Trump is merely a clueless and helpless, though ever so narcissistic fool, a puppet in the hands of neo liberals ! The truth is that we ve all been living far above our means for two or three decades now, a unsustainable situation created by planet destructive globalization and undue Central Banks interference delaying a healthy cleansing of the system! The Dow being up 400% since 2009 tells us exactly how utterly INSANE the situation has become, zombies being kept alive with free money, CBs buying up shares and bonds, hoping for miracles to happen in the meantime. Miracles are unlikely to appen though, this madness has got to stop and will stop somehow, the 200 trillion $ question(s) being WHEN and HOW.....


I think Trumps goal is to increase trade within our borders in lieu of exports and imports. If so, unless GDP crashes, he's winning.


Every time Trump opens his mouth the USD goes up. Now at a two year high and going higher, it will destroy what is left of US manufacturing.


Lower American corporate profitability will be the main loss of the trade war.


This "analysis" further highlights why you missed the decline in PM's, and will miss the next ramp in stocks. The global market is, well, global - meaning the impact of trade, or the Fed, on global investment flows (invisible hand) is small, and certainly not the driver of markets.

The primary driver of the current trend is broke govts getting increasingly desperate and aggressive in their hunt for other people's money. If you look at the RELATIVE performance of the US dollar and markets, it is obvious that we are winning the war for capital. So, yes, Trump is winning against the corrupt establishment, worldwide.

Now, one can certainly argue that Trump is winning because he has the Dollar, but one can also argue that things, especially confidence, would be worse with Hitlary, or any other establishment hack in the WH.

Finally, I'm not saying our economy will not suffer from the global slowdown, caused by growing govt largess. What I'm saying is global investment still has to find a safe-haven, and when the sovereign debt bubble pops, the gradual flow from public to private we have seen will turn into a tsunami.


With imports and exports falling, I'm starting to believe the GLOBAL economy is slowing down.


But Trump is still collecting $100 billions tariffs every month from China. With that amount of free money, Trump can send millions of soybeans to shithole countries for free.


This is just a short term result. Trade wars typically take 5-7 years, during which time trade in both countries spirals every lower, and both economies go into contraction. After awhile, and a large amount of economic pain on both sides, sanity returns.


When you fight, there are two situations in which you can win. [1] It is a fight to the death, and you survive by killing your attacker [2] You manage by conquest to take/steal the other's property

Barring the applicability of those 2 outcomes, you will always be better of by not fighting, or even more so, by cooperating.

Cooperation is clearly what all the mutual deals between Chinese and US consumers, producers, and corporations are all about. Trump and the American government know better than all these parties. Without resorting to convincing the parties that they are getting ripped of, all participants are being overruled by force by an authority who claims war is a more positive outcome than cooperation.


"This is not exactly winning by either side, "

No one wins a trade war but I have a more basic question (at least I think it's basic):

Is there an intelligent reason for one person, (or group of persons) to want to outdo another person (or group of persons), simply for the sake of outdoing them?

Global Economics