Stocks Tank as Trade Deficit Reaches 10-Year Highs

A newsstand in Beijing on December 3. GREG BAKER/AFP/Getty Images

The U.S. trade deficit grew to a 10-year high Thursday as self-proclaimed "tariff man" President Donald Trump continued to place his trade war with China at the center of his administration's economic platform.

"When people or countries come in to raid the great wealth of our Nation, I want them to pay for the privilege of doing so. It will always be the best way to max out our economic power. We are right now taking in $billions in Tariffs. MAKE AMERICA RICH AGAIN," he tweeted this week.

But trade deficits between the U.S. and China grew to an all-time high in October as imports rose 0.2 percent to $266.5 billion and exports fell 0.1 percent to $211 billion, making it clear that increased tariffs were not making "America rich again."

The news came as the stock market fell once again Thursday, wiping away nearly all gains in 2018. Earlier this week, the U.S. Treasury yield curve inverted, a sign that typically indicates the economy is set to weaken. In a recent survey by Bloomberg, a vast majority of economists said the U.S. would likely see another recession before the end of 2020.

President Trump, who often takes credit for a thriving stock market and economy, has either blown off recessionary fears or placed the blame on Federal Reserve Chair Jerome Powell for raising interest rates.

But he may have more to worry about than he thinks.

"Trump's biggest worry in 2020 isn't a particular candidate or ticket, it's a recession," said Ford O'Connell, a Republican strategist and former McCain-Palin presidential campaign adviser. "Incumbents have won 15 to 4 since 1900, but what the losers all have in common is a recession or major economic event."

Gary Cohn, President Trump's former top economic adviser, warned against instigating trade wars with China, Canada, Mexico and a number of European nations. "If you end up with a tariff battle, you will end up with price inflation. You could end up with more consumer debt. Those are all historic ingredients for an economic slowdown," Cohn told The Washington Post. "So I would not like to see that happen."

Still, the president has continued his course, and after Cohn resigned this year he brought on former CNBC correspondent Larry Kudlow, who is sympathetic to increased tariffs, to take the top economic spot in the White House.

The president has so far levied new tariffs on $250 billion of Chinese goods, and China has responded with increased tariffs on a long list of U.S. exports, including soybeans and agricultural products. American farmers have been especially hard-hit by the retaliatory tariffs, though the Trump administration promised them a $12 billion bailout program run by the USDA.

It appeared that progress between the U.S. and China was made this week during a dinner at the G20 summit in Buenos Aires. But promises made in tweets by the president were quickly walked back by his top advisers.

"It doesn't seem like anything was actually agreed to at the dinner and White House officials are contorting themselves into pretzels to reconcile Trump's tweets (which seem if not completely fabricated then grossly exaggerated) with reality," traders from JP Morgan wrote in their desk commentary Tuesday.