Im-Politic: Muddled Iran Deal Messages from the Democrats

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allies, Amy Klobuchar, Cory Booker, Democratic Party, Democrats, election 2020, foreign policy, Im-Politic, Iran, Iran deal, Iran nuclear deal, JCPOA, Joint Comprehensive Plan of Action, Kamala Harris, McClatchy News Service, Obama, oil, Persian Gulf, sanctions, Trump

The usual gang of political observers and commentators (apologies to the soon-to-be-departed Mad magazine) seem to agree that this year’s Democratic candidates for President haven’t been paying much attention yet to foreign policy. Here’s my explanation: The more many of them say about the subject, the clearer their ignorance and incoherence will become, and the last few weeks have just provided a splendid example – public positions stake out on whether to rejoin the 2015 international deal aimed at curbing and slowing Iran’s nuclear weapons development.

You’ll recall that the Iran deal (officially known as the Joint Comprehensive Plan of Action, or JCPOA) was signed by the Islamic Republic on the one hand, and China, France, Germany, Russia, the United Kingdom, and the United States on the other. Under its terms, Iran agreed to certain restrictions on its nuclear program in return for substantial relief from various, mainly economic, sanctions imposed by some of these individual countries, along with the United Nations as a whole, in retaliation both for Iran’s nuclear and some other activities deemed unacceptable threats to international security.

Even the deal’s backers conceded some serious flaws, but insisted that its terms were the best possible given divisions among the United States, its allies, and Russia and China about how hard to press Iran (generally due to differences over the value of resuming commerce as usual with Iran). I initially bought this line, too. But as I recently wrote, ensuing developments – mainly the devastating impact on Iran’s economy of unilateral U.S. sanctions reimposed by Washington once President Trump withdrew from the agreement in May, 2018 – makes clear that Iran’s interlocutors had much more leverage than they (including then President Obama) claimed, and that a better deal was always possible.

Enter the 2020 Democrats. Understandably, they’re seeking to criticize the Trump foreign policy record whenever they can, and many have attacked his decision to pull out of the JCPOA. But most of these attackers have implicitly expressed agreement with the Trump view that the deal can and must be improved.

Take Flavor of the Month Kamala Harris. According to the first-term California Senator, Mr. Trump deserved the blame for the recent rise in tensions in the Persian Gulf that culminated in alleged Iranian attacks on oil tankers and an American drone because he “put in place a series of events that led to” those moves. By this she of course meant Iran’s apparent decision to follow through on its threats to defend legitimate interests it sees as threatened by (a) the United States’ overall economic “maximum pressure” campaign aimed at ending Tehran’s alleged regional aggression, and (b) more specifically by the Trump administration’s cancellation of sanctions waivers that had permitted other countries to buy some of the oil Iran desperately needs to sell in order to stay afloat economically.

As the Islamic Republic stated, it would seek to press the other signatories to convince the United States to back off the sanctions by pulling out of several provisions of the nuclear deal (chiefly, those limiting its ability to create bomb-grade uranium) and by preventing any other countries from importing any Persian Gulf oil themselves.

How would Harris respond? She told a CBS News reporter, “Well frankly, I believe that we need to get back into the Iran nuclear deal.” That’s certainly logical, since respecting the deal’s terms would require that Washington drop its sanctions, presumably granting Iran the economic support it’s seeking and eliminating any reason for attacking Gulf shipping.

But she then (unwittingly, it seems) endorsed the position of the President and other critics that deal improvements are urgently needed – and possible: “I would strengthen it. I would include ballistic- ballistic missile testing. I think that we can strengthen what we do in terms of monitoring and verification, of progress.” Never mind, of course, that there’s no sign to date that any of the other signatories agree.

And to compound the confusion, Harris proceeded to pivot back to praise for the agreement as-is: “But there’s no question that a lot of negotiation with a great deal of depth took place over a long period of time to reach that agreement, and it was it was an agreement that was being complied with by all parties.”

My head is spinning, and yours should be, too.

But evidently Senators Cory Booker of New Jersey and Amy Klobuchar of Minnesota understand Harris’ message perfectly. Because it’s their message, too.

In their initial presidential debate appearances, both these supporters of the original deal attacked the Trump pull-out but their support for reentry seemed linked to implementing changes.

Said Booker ““It was a mistake to pull out of that deal. Donald Trump is marching us to a far more difficult situation.” But he then promised, “If I have an opportunity to leverage a better deal, I’m going to do it.”

Klobuchar charged that the Trump pullout “made us less safe” because although the agreement “was imperfect…it was a good deal for that moment.” But apparently she now worries that – just a few years later – the moment has passed. For she suggested that (according to the McClatchy News Service summary cited above) “the agreement’s ‘sunset periods’ – caps on Iran’s enrichment and stockpiling of fissile material set to expire five to 10 years from the next inauguration– [are] a potential point of renegotiation.” Of course, the short duration of these caps was cited by deal critics as a major weakness.

A common aphorism holds that it’s “Better to remain silent and be thought a fool than to speak and to remove all doubt.” If these Iran deal stances are any indication, most Democratic candidates are demonstrating major political smarts, at least, by avoiding foreign policy issues.

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Our So-Called Foreign Policy: Time to “Lead from Behind” on the Gulf?

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allies, America First, Barack Obama, Iran, oil, Our So-Called Foreign Policy, Persian Gulf, Straits of Hormuz

It sounds like a global nightmare scenario like those described in Cold War thrillers like “Fail Safe” – Middle East militants from someplace start attacking shipping in the Persian Gulf, through which a third of the world’s oil supplies flow, and the international economy teeters on the brink of total collapse. Except such attacks are happening right now.

So the Trump administration’s counter-moves – sounding alarms, blaming Iran, and seeking to rally global support for some kind of forceful response – seem to make perfect sense.

Actually, however, there’s every reason to think that the global economy can ride out this apparent crisis just fine, and that as a result, the President is missing an opportunity to display the virtues of a genuine America First foreign policy.

Not that the Gulf doesn’t matter for global oil trade. An estimated 30 percent of the globe’s oil exports travel through it, and out to markets the world over through its narrow Straits of Hormuz. Moreover, many of the world’s leading economies depend on such oil for big (though significantly varying) shares of their total energy use.

But these countries so far have displayed no interest in taking military steps to protect the oil flow. Indeed, many have focused their efforts instead on questioning the U.S. claims about Iran’s responsibility.

It’s tempting to view these actions as simply the latest example of such American allies counting on the United States to pull their fat from the fire – and/or a worrisome sign that the Trump administration’s alleged “bullying” on issues ranging from China trade to sharing the burden for the supposedly common defense to dealing with Iran and its nuclear weapons ambitions and other aggressive policies has cost it precious credibility with America’s best foreign friends.

Yet there’s also a strong case to be made that in this case, the allies’ apparent dithering (a charge that would be justified by either of the above narratives) makes perfect sense. The reason? The world literally has been here before – in spades. That is, in recent memory, the Gulf has been a much more violent place, and a much more threatening environment for oil tankers specifically. And as described in this useful Washington Post review, most of the global economic consequences were pretty minor. Those that weren’t – mainly entailing oil price hikes – didn’t last especially long in part because, quite naturally, the higher prices generated more supply, which brought the prices back down after a few years.   

Moreover, even if “this time it’s different” in the Gulf, there’s an equally strong case that the United States should be following the allies’ lead. After all, they’re potentially the countries that are most seriously affected. Therefore, at least theoretically speaking, they have the greatest incentives to behave responsibly. If their economies do run into trouble, the U.S. economy certainly wouldn’t escape unscathed, given its extensive trade and investment with Europe and Asia.

But because thanks to its fracking-led energy production revolution, the United States no longer imports much oil from anywhere any more, the impact would be much less important. Chances are, moreover, that this impact would be far below a level that would warrant military action, much less taking charge of such operations.  And since the allies’ ambivalence indicates that their aid couldn’t be counted on, a major American-dominated military initiative seems even more foolhardy.  

Several years ago, an anonymous Obama administration official created a stir when he described the President’s approach for intervening in the Libya civil war as “leading from behind.” Critics definitely had a point when they charged that such strategies were difficult at best to reconcile with the then prevailing globalist foreign policy strategy that defined vital U.S. interests in sweeping, near-universal terms and emphasized the need for active, practically ceaseless American global engagement. But following the allies’ lead in the current Persian Gulf crisis seems like just the ticket.

Our So-Called Foreign Policy: Why Trump Needs to Go Real America First vs the Saudis

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America First, globalism, Iran, Israel, Jamal Khashoggi, Magnitsky sanctions, Middle East, Mohammed bin Salman, oil, Our So-Called Foreign Policy, Saudi Arabia, terrorism, Washington Post

Earlier this year, The National Interest published a lengthy article of mine arguing that President Trump seemed to be repeating a mistake that has doomed previous efforts to replace a failed, longstanding globalist strategy with a fundamentally new foreign policy much better suited to the country’s real strengths and weaknesses. And just this morning, this prediction was borne out by the Washington Post‘s editorial writers (best viewed as among the many unofficial spokespeople for globalist approaches that fill the Mainstream Media) in a piece they wrote on Mr. Trump’s approach to the murder of dissident journalist Jamal Khashoggi authorized at top levels by the Saudi Arabian monarchy.

My article made the case that globalism would never be rejected unless the President made a clean, fully explained, break with the assumptions on which it was based. Instead, it pointed out, he seemed to have settled (wittingly or not) on an approach that might be called “globalism on the cheap.” That is, Mr. Trump’s actions appear to reflect a belief that most and even all of globalism’s supposed economic and security benefits can be realized, and supposed goals achieved (both entailing shaping the entire global environment in ways America allegedly needs in order to be acceptably safe and prosperous) while reducing its costs (e.g., subsidizing the defense of free-riding allies, and their economies with lopsided trade arrangements). The essay also explained that, because similar claims made by globalism critics in the past turned out to be literally too good to be true, numerous chances for genuine and urgently needed foreign policy overhaul have been lost.

That’s why the Post editorial is so revealing. It shows that, because Mr. Trump’s rejection of globalism has been so partial (in this case, when it comes to the Middle East), he’s made himself vulnerable to the kinds of attacks that have vanquished earlier critics and squandered a golden opportunity to stake out a true America First position that would have been strategically sound and politically popular. In fact, the Trump Saudi statements have enabled his critics to slam him in two powerful ways.

First, the Post edit writers have restated the common charge that the President was “craven” in letting Saudi crown prince Mohammed bin Salman off the hook for the Khashoggi murder largely because of economic considerations like the kingdom’s purchases of U.S.-made weapons and its cooperation in keeping oil prices low. As the editorial puts it, Mr. Trump, “cares not a fig for American values….And if he can sell one or two more fighter jets, who cares if a journalist is murdered?”

Small wonder that his decision has been so unpopular even with many of his supporters in Congress. Just as bad, the President’s rationale is so narrow that it’s been easy to undercut on its own terms (e.g., by questioning the actual importance of Saudi Arabia’s imports to the U.S. economy).

But the editorial’s second line of attack is much more important, and is worth presenting in full. The President, according to the Post, is

“undermining the basic understanding that has worked to the United States’ advantage since World War II under presidents both Republican and Democratic.

“Those leaders all accepted that, with less than 5 percent of global population but more than 20 percent of the global economy, the United States, more than any other nation, depends on and benefits from predictable rules. It needs a world where business executives can go forth and come home without fear of kidnapping, where ships can ply the oceans without armed escorts, where contracts are honored and disputes fairly adjudicated. It needs a world where journalists can report and inform Americans on the true conditions on the ground.

“Previous presidents understood that the way to achieve such a world was to enlist allies who would live by the United States’ rules in return for protection — safe in knowledge that the United States would not use its preeminence to squeeze them for every last dollar. They would go along because the United States stood not just for itself but for rules that benefited everyone and for values they cherished, as well: freedom, human dignity, the rule of law. By championing good — albeit imperfectly and inconsistently — the United States did well.”

As my National Interest piece explained, this by-now-standard defense of globalism has the decisive sources of U.S. security and prosperity exactly backward. Far from depending on a placid world largely knit together by alliances and institutions dominated by like-minded countries, the real guarantors of U.S. power and wealth are America’s…power and wealth – i.e., its own assets – along with an unmistakable willingness to use them when advisable.

Further, this power and wealth have been indispensable both in instances when unilateral action has been desirable or unavoidable, and in ensuring that the specific forms taken by various cooperative (“multilateral”) ventures advance American interests – an outcome globalists wrongly take for granted.

These America First-supporting conclusions, by the way, are so valid that it’s become routine for even globalists unknowingly to acknowledge them – as did the Post’s editorialists when they (rightly) accused the President of failing “to see that Saudi Arabia is far more dependent on the United States than the reverse.”

But Mr. Trump’s own failure to recognize the real U.S.-Saudi power balance is far more frustrating for backers of new America First foreign policies. And in a Middle Eastern context, it’s manifested in much more than his views on the Saudi market for American arms exports.

For example, it’s also apparent from his conviction that keeping world and U.S. oil prices relatively low depends on Washington making nice to Riyadh – whereas the Saudis have learned that overly expensive and/or skyrocketing oil prices hurt them (badly) as well. After all, until recently, they’ve reduced American and worldwide economic growth, and therefore reduced the oil revenues on which the kingdom is completely reliant economically. More recently, because of the U.S. energy production revolution (a development vigorously – and correctly – championed by the President), the higher global oil prices rise, the more American oil and natural gas come on stream to the world market, and take market share from the Saudis and other Middle Eastern and foreign exporters.

And, as I’ve written repeatedly, the President’s partial America-First-ism is clear from his belief that it’s vital for U.S. national security to support Saudi Arabia and other Sunni Muslim countries (along with Israel) in order to contain Iran’s regional ambitions.

So what would a real America First approach to the Khashoggi murder have been? Nothing less than the long overdue beginning of a U.S. strategic withdrawal from the hopelessly violent and dysfunctional Middle East based on the (equally long overdue) understanding. This decision would be described an explained in high profile presidential speeches and other declarations that, with the following points, would put the globalists on the defensive for a change: that the United States no longer needs the region’s oil nearly so desperately; that terrorist threats originating in the Middle East are best met by securing America’s own borders, rather than by battling jihadist networks all around the world; and that any Iranian threat to the U.S. homeland is eminently deter-able with U.S. nuclear forces.

P.S. For those concerned about Israel’s security (and that includes me), the Jewish state is more than capable of protecting itself through a combination of its own military strength, its own emerging alliance with the Sunnis – which will also contain any possible headaches from Palestinian radicals – and continuing military and economic assistance from Washington.

In the process, Mr. Trump should announce some painful and specific slaps at the Saudis – like expelling, say, half of their staff from their embassy in Washington and imposing painful so-called Magnitsky sanctions on the personal finances of bin Salman and others at the most senior levels of the Saudi leadership. For nothing is more central to the concept of America First than that, barring truly vital strategic interests to the contrary (the reduction of which itself is a high America First priority), no one gets away with harming American citizens or legal residents (Khashoggi’s status) unjustly.

Our So-Called Foreign Policy: Why the Khashoggi Incident Really Matters

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Al Qaeda, America First, arms sales, Cold War, energy, globalism, globalists, Iran, ISIS, Islam, Israel, Jamal Khashoggi, jihadism, Middle East, oil, Our So-Called Foreign Policy, Persian Gulf, Saudi Arabia, September 11, terrorism, Trump

Important though it is, the most important question surrounding the possibility that Saudi Arabia’s monarchy has killed Jamal Khashoggi is not whether the United States responds or how it responds if the kingdom did murder the dissident journalist – who happens to be a legal resident of the United States.

Instead, the most important question is really two-fold. First, do the many U.S. foreign policy traditionalists calling for severe punishment understand how such a move could undercut the decades-long approach toward the Saudis that they themselves have strongly supported? Second, and even more intriguing, do these globalists understand that the Khashoggi affair is simply the latest in a long string of signs that it’s well past time for the United States to adopt a genuine America First approach and leave the hot, dysfunctional mess that is the entire Muslim Middle East?

Given the prominence of maintaining good relations with the Saudis in the strategies of American globalists across the the board, it’s nothing less than jaw-dropping to see how many of them – liberal and conservative alike – are calling for strong counter-measures if Khashoggi is in fact dead at Saudi hands. Here’s a representative example from no less than former CIA chief John Brennan – who’s gone on Never Trump rampage in part because he views Trump’s foreign policy views as anathema. My astonishment, however, is justified even if much of the outrage is no more than outrage-signaling – posturing assumed to be safe because the Trump administration will eventually not upset the felafel cart.

After all, since World War II, Saudi Arabia and the rest of the Persian Gulf region has been valued as a prime source of the oil desperately needed for the world economy to function acceptably in peacetime, and crucial to prevailing over ruthless global enemies in hot and cold wars alike. Once the Soviet threat disappeared, the region’s oil retained all of its perceived importance, and the critical mass of the foreign policy establishment gravitated toward seeing first Iraq’s Saddam Hussein and then Iran’s theocracy as the prime threat to the world’s unimpeded access. Crucially, not even evidence of (unofficial?) Saudi support for the Islamic extremists of Al Qaeda who launched the September 11 attacks ever truly threatened the U.S.-Saudi connection. 

Indeed, in recent years, even far left-of-center American politicians joined widespread calls for Washington to create a Middle Eastern-dominated coalition to handle most of the fight against ISIS (a successor group to Al Qaeda). And one of the anchors of this arrangement was expected to be none other than Saudi Arabia.

As I’ve argued for years now, none of the arguments for a close, if informal, U.S.-Saudi alliance holds any more water. North America possesses all the fossil fuels needed by the United States, and thanks to the shale/fracking-led energy technology revolution, the Persian Gulf’s role as key global oil supplier is greatly diminished as well. The terrorist threats likely to keep emanating from the region are best dealt with through much stronger U.S. border controls, not repeated American military interventions or fantasies about the Muslim Middle East’s decrepit (and highly compromised) regimes becoming a strong, reliable bulwark against jihadism.

And those claiming that Israel’s security warrants continuing America’s Middle East policy status quo need to remember that Israel and Saudi Arabia (and most other Sunni monarchies) have now created a tacit alliance to counter Shi’ite Iran. Moreover, Washington can always keep selling or simply giving the Israelis all the weapons they need.

The situation has changed so much that the most compelling argument against steps like cutting off or suspending U.S. arms sales to the Saudis has been advanced by President Trump: a boatload of revenue and jobs would be lost by the American economy, and the Saudis could always turn to alternate suppliers (like the Chinese and, more credibly – because their military equipment is still better – the Russians). In addition, don’t forget this irony: Consistent with its anti-Iran goals, Israel and its own impressive defense-related technologies could also partly fill the vacuum left by a U.S. withdrawal from the Saudi market.

At the same time, there’s no shortage of countries living in dangerous neighborhoods that would remain or could become massive buyers of American weapons. And as pointed out here, the Saudi military has relied on so much U.S. equipment for so long that changing its complexion would be as complicated as it would be expensive. Not to mention the years it would take for a regime that faces imminent threats to complete this task.

As a result, even if Khashoggi miraculously reappears one day, or even if he doesn’t but the Saudis are innocent, here’s hoping that the uproar over his disappearance triggers some major rethinking of America’s Middle East policy. After all, to paraphrase a famous recent remark about governing, a policy firestorm is a terrible thing to waste.

(What’s Left of) Our Economy: China, Manufacturing, the EU, & Canada (sort of) Led the New Trade Deficit Surge

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Canada, China, EU, European Union, exports, imports, Made in Washington trade deficit, manufacturing, Mexico, NAFTA, North American Free Frade Agreement, oil, real trade deficii, recovery, services, tariffs, Trade, trade deficit, Trump, {What's Left of) Our Economy

With President Trump still threatening to slap $200 billion worth of tariffs on Chinese imports this week, this morning’s trade figures from the Census Bureau show that the U.S. goods deficit with China hit a new monthly record of $36.83 billion. The U.S. manufacturing trade shortfall reached an all-time high as well – $92.29 billion. And as talks to revamp NAFTA (the North American Free Trade Agreement) continue, America’s goods gap with Canada jumped by nearly 58 percent on month, but the merchandise shortfall with Mexico sank by more than 25 percent.

The goods gap with the European Union, meanwhile, reached record monthly heights as well ($17.59 billion). The sequential increase of 50.03 percent was the greatest since October, 2013 (58.87 percent) and was driven by the biggest monthly plunge in U.S. merchandise exports (15.72 percent) to the region since July, 2006 (16.62 percent).

America’s combined goods and services trade deficit rose at its fastest pace (9.50 percent) since March, 2015 (35.63 percent), to $50.08 billion from a downwardly revised $45.74 billion. Total monthly imports of $261.16 billion were a new record as well, and total monthly exports fell for the first time since January – to $211.08 billion. Other all-time monthly highs were recorded for services exports ($70.29 billion), services imports ($47.22 billion), goods imports ($213.94 billion), and current dollar oil exports ($15.77 billion). Pre-inflation oil imports of $20.32 billion were the highest since December, 2014 ($23.58 billion). Though not a new monthly record in July, the goods trade deficit did increase that month at its fastest pace (6.11 percent) since November, 2016 (6.76 percent).

Although these July trade figures come too early in the third quarter to calculate trade’s drag on the current economic recovery through that period, if the monthly deficits remain in this neighborhood, trade’s subtraction from cumulative growth since the expansion began would rebound after falling during the second quarter. As of the revised second quarter figures, the increase in the real total trade deficit since mid-2009 had reduced inflation-adjusted growth during this period by 11.79 percent, or $398.50 billion. That was down from the $457.20 billion drag (14.33 percent) as of the final first quarter results.

The trade drag numbers are much greater for the Made in Washington trade deficit – that portion of U.S. trade flows most heavily influenced by trade agreements and similar trade policy decisions. As a result, it omits trade in services (where liberalization efforts remain at an early stage) and in energy (which is rarely discussed in trade diplomacy as such). The final first quarter figures pegged this growth drag at 17.37 percent, or $523.88 billion worth of lost constant dollar growth. As of the revised second quarter numbers, this growth bite had shrunk to 14.88 percent, or $502.90 billion worth of lost real growth.

Our So-Called Foreign Policy: Syria, Round II

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air strikes, America First, chemical weapons, globalism, jihadism, John R. Bolton, Middle East, oil, Our So-Called Foreign Policy, Syria, terrorism, Trump

About a year ago, when President Trump first ordered airstrikes to punish Syria for using chemical weapons in its civil war, I made the case for not jumping to the conclusion that the chief executive had betrayed his promises to carry out an America First-style foreign policy. This weekend of course came a second set of Syria strikes, with the same declared objective, and I still believe that they don’t herald a new burst of (futile, if not counterproductive) interventionism in the Middle East. My main reason: Mr. Trump’s own words in announcing the attacks.

At the same time, don’t think that I’m incredibly confident that I’m right.  

First, the reasons for some confidence about where Syria policy is headed. According to the President, he’s under no illusion that either limited American uses of military force or more comprehensive policies will cure what ails Syria or the completely dysfunctional and failed Middle Eastern neighborhood in which it lives. In his words, not only is he opposed to “an indefinite presence in Syria.” He declared more broadly:

“Looking around our very troubled world, Americans have no illusions. We cannot purge the world of evil or act everywhere there is tyranny.

“No amount of American blood or treasure can produce lasting peace and security in the Middle East. It’s a troubled place. We will try to make it better, but it is a troubled place.”

In other words, Mr Trump is rejecting the globalist premises of his post-World War II predecessors. Reflecting the ostensible (and, it seems, eternal) lessons of appeasing fascist dictators during the 1930s, they have held that aggression or turmoil or instability or (fill in the upsetting development of your choice) anywhere are all too likely to escalate into crises that will eventually threaten the United States.

As a result, American forces repeatedly have been ordered into backwater conflicts with no intrinsic potential to affect U.S. security, prosperity, or freedom in any tangible way. But given the consequent globalist resolve both to nip these problems in the bud, as well as to address their underlying causes, they have demonstrated plenty of potential to mire the country into a series of costly quagmires.

Therefore, even though Mr. Trump – like former President Barack Obama before him – has described the airstrikes as essential for upholding a global norm (decades-long international bans on the “ghastly,” “barbaric,” and “brutal” use of chemical weapons), he seems to believe that this military practice can be isolated not only from whatever deep-rooted economic, social, and cultural failures have produced the strife that has occasioned their use, but from that consequent conflict itself.

But I’m worried about three big caveats. First, as long as the Syria civil war lasts, the more apparent it will become that limited actions like airstrikes won’t prevent atrocities like chemical weapons use, and the greater the temptation for more ambitious measures judged likelier to achieve their aims – but also capable of triggering a conflict with Russia, which like the United States has officials and military personnel in Syria.

Second, although the President has portrayed Syria as a conflict from which the United States can soon walk away, this analysis depends on claims that deserve major skepticism, to say the least – like the final defeat of ISIS (and, by extension, all jihadist terrorism?), and the possible emergence of a regional coalition of Sunni Arab states that “can ensure that Iran does not profit from the eradication of ISIS” and spread its influence across the Middle East.

After decades in which the American people have been told (rightly) that the region can endanger their security (via that terrorism) and their prosperity (via its gargantuan oil supplies), these positions will invariably look like naive hopes if the President’s rosy scenario doesn’t pan out. In fact, they could well spur calls for deeper and more dangerous U.S. involvement – even from an understandably skeptical public.

What’s of course supremely ironic about that dilemma is that important elements of the Trump domestic programs look like much more promising ways to shield the nation from Middle East threats than the globalist strategy he’s partly embraced of “fighting ’em there so we don’t face ’em here,” and promoting prosperity by trying to control a dizzying array of events abroad.

As I’ve written repeatedly, it makes much more sense to deal with terrorism by “keeping them out of here” through the kinds of serious border security programs the President endorses, and to continue breaking the region’s strong choke hold on global energy supplies by supporting the production revolution that American energy companies have engineered at home.

The third reason for concerns about a more interventionist Trump foreign policy has to do with his appointment of John R. Bolton as his national security adviser. Bolton, a former (interim) U.S. UN ambassador during George W. Bush’s presidency, is a strong, lifelong supporter of using the American military to solve all manner of national security challenges abroad.

It’s true that, unlike most globalists, Bolton seems to believe that these challenges will stay solved without any kind of nation-building- or democracy promotion-type follow-on. Hence his unrepentant support for the Bush administration overthrow of Iraq’s Saddam Hussein  – without a serious plan for the war’s aftermath. In all, it’s worrisome for believers in an America First approach to foreign policy that Bolton’s often trigger-happy voice could often be the last one Mr. Trump hears before making a momentous strategic decision.

Bottom-line: The slope leading from America’s current approach to Syria and the Middle East’s turmoil in general to another major war isn’t completely slippery. But it’s hard to be confident that President Trump’s footing is completely secure, either.

(What’s Left of) Our Economy: On Eve of Trump Tariffs, a Big Increase for the (January) U.S. Trade Deficit

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Canada, China, European Union, exports, high tech goods trade, imports, manufacturing, merchandise trade, Mexico, NAFTA, North American Free Trade Agreement, oil, South Korea, tariffs, Trade, Trade Deficits, Trump, {What's Left of) Our Economy

The U.S. monthly trade deficit surged in January to its highest level ($56.6o billion) since October, 2008 ($60.19 billion) – when the Lehman Brothers bankruptcy sparked a worldwide financial and economic panic.

New all-time records were set by monthly services exports ($66.66 billion) and imports ($46.78 billion), and December results for both were revised significantly upward (0.77 percent for the former, and 2.07 percent for the latter). The trade deficit in petroleum products jumped by 116.64 percent on month in January – the biggest sequential percentage increase ever – to $7.08 billion. That total was a post-March ($8.28 billion) high.

America’s January merchandise trade deficit in goods ($76.49 billion) was a post-July, 2008 ($77.63 billion) high, while the trade gaps in manufacturing and in goods with China bounced back on month to their second highest all-time totals ($35.95 billion and $86.62 billion, respectively). Moreover, U.S. merchandise exports to China sank by their greatest percentage on month (28.05 percent) since January, 1999 (43.37 percent). Total exports fell on month (by 1.30 percent) for the first time since October, and combined goods and services imports dipped fractionally (to $257.51 billion) from the upwardly revised record set in December.

Here are selected highlights of the latest monthly (January) trade balance figures released this morning by the Census Bureau:

>The combined U.S. goods and services trade deficit rose on month in January to its biggest total ($53.91 billion) since October, 2008 ($60.19 billion) – when the world economy teetered on the brink of meltdown due to the Lehman Brothers bankruptcy.

>The figure represented a 4.99 percent increase from a December figure of $53.91 billion that was revised up by an unusually large 1.49 percent.

>January saw all-time records for monthly services exports and imports. The former improved sequentially from by 0.41 percent, from $66.39 billion to $66.66 billion, while the latter grew by 0.38 percent, from $46.60 billion to $46.78 billion.

>At the same time, both services trade figures also saw major revisions in the December – both upward. The exports number was raised by 0.77 percent, and imports upgraded by an enormous 2.07 percent.

>January’s trade deficit increase was led in relative terms by the nation’s oil trade deficit – which more than doubled sequentially, from $3.27 billion to $7.08 billion. That was the highest such total since last March’s $8.28 billion.

>Partly as a result, the U.S. merchandise trade deficit widened sequentially in January by 3.79 percent, to $76.49 billion – its highest such level since July, 2008’s $77.63 billion.

>But manufacturing contributed significantly to the rise in the overall trade deficit and the merchandise shortfall as well. Its chronic trade shortfall ballooned by 14.54 percent on month to hit $86.62 billion – just shy of October’s record of $88.98 billion.

>Manufacturing exports slid by 8.99 percent sequentially in January, from $94.89 billion to $86.36 billion, while imports were off by only 0.08 percent, from $173.13 billion to $172.99 billion.

>In turn, helping to fuel this deterioration in the manufacturing trade balance was the 16.70 percent worsening of the U.S. merchandise deficit with China. The January figure of $35.93 billion was the second highest of all time, too – trailing only September, 2015’s $36.29 billion. The increase, moreover, was the biggest since May, 2016’s 19.43 percent. 

>Mainly responsible for the China trade deficit’s increase was a 28.05 percent nosedive in U.S. goods exports to the strongly growing People’s Republic. Although the decrease followed a record December export total of $13.67 billion, it was still the biggest such percentage drop since January, 1999 (43.37 percent). 

>The $9.84 billion in U.S. goods sales to China in January, moreover, was the lowest such figure since June’s $9.71 billion. 

>U.S. merchandise imports from China rose – by 2.95 percent, to $45.79 billion.

>Total goods exports were down in January by 1.30 percent (to $200.91 billion) from December’s upwardly revised $203.61 billion. The drop was the first since October.

>Total imports in January dipped only fractionally – to $257.510 billion – from December’s upwardly revised record of $257.514 billion.

>The high tech goods trade deficit rose by 14.25 percent on month in January, from $10.06 billion to $11.49 billion.

>High tech exports plunged on month by 18.11 percent to $27.46 billion – a post February, 2017 ($25.39 billion) low, and the biggest falloff since January, 2017’s 19.01 percent.

>High tech goods imports sank, too – by 10.64 percent, to $38.95 billion. That was the biggest drop since last February’s 13.31 percent.

>As the Trump administration’s efforts to renegotiate the North American Free Trade Agreement (NAFTA) face an uncertain future, America’s merchandise trade deficit with Canada shot up by 65.04 percent on month in January, to $3.64 billion. That’s its highest level since December, 2014 ($4.07 billion).

>Yet the U.S. goods trade shortfall with Mexico decreased by 23.03 percent – to $4.14 billion. That’s the lowest such total since last January ($3.95 billion).

>Trade tensions with the European Union (EU) seem to growing as well, due mainly to the Trump administration’s announcement of steel and aluminum tariffs. In January, however, the merchandise trade gap with the EU fell by 13.88 percent, to $13.62 billion.

>President Trump is also hoping to revamp the bilateral U.S.-South Korea trade agreement (KORUS). In January, America’s goods trade deficit with South Korea hit $1.97 billion – a 57.57 percent monthly rise. At the same time, December’s $1.25 billion goods trade gap was the smallest since December, 2016’s $1.17 billion.

(What’s Left of) Our Economy: New Figures Show a Likely Post-Recession U.S. Trade Deficit High in Trump’s Year One

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Census Bureau, China, exports, gross domestic product, high tech goods, imports, Made in Washington trade deficit, manufacturing, non-oil goods deficit, oil, recovery, Trade, trade deficit, Trump, {What's Left of) Our Economy

In November, the highest combined U.S. goods and services trade deficit ($50.50 billion) since January, 2012 ($50.98 billion) threatened to push the annual shortfall to its highest level since 2008 ($708.73 billion) – as the Great Recession got underway.

The 3.24 percent sequential increase in the overall trade deficit resulted in part from a 46.11 percent monthly jump in the oil gap and from the second straight all-time monthly figure for total imports ($250.72 billion versus October’s $244.70 billion); record monthly goods imports ($205.46 billion); a second straight record monthly high-tech goods deficit ($15.53 billion versus October’s $13.82 billion) which propelled the total to a new annual record ($100.33 billion) after only eleven months; and all-time highs in the monthly non-oil goods deficit in inflation-adjusted and pre-inflation terms ($66.66 billion versus $65.43 billion), and ($65.22 billion versus $64.99 billion). The former will probably help turn trade into a net U.S. growth killer in the fourth quarter of this year, and since both are largely driven by U.S. trade policy, their growth signals major continuing challenges for the Trump administration in this field.

The immense U.S. manufacturing trade deficit retreated on month from its October all-time high ($88.98 b). But at $86.20 billion, it still represented the second highest monthly total on record, and on an annual basis, this gap, too, seems likely to set its latest annual record. Not surprisingly, given its manufacturing-heavy nature, the enormous U.S. merchandise trade deficit with China looks headed to a new annual record as well.

Here are selected highlights of the latest monthly (November) trade balance figures released Friday morning by the Census Bureau:

>November’s combined U.S. goods and services trade deficit of ($50.50 billion), the highest such level since January, 2012’s $50.98 billion, greatly boosted the odds that the overall trade shortfall in 2017 will be the worst since 2008’s $708.73 billion – which was recorded as the Great Recession was spreading through the American economy.

>As of November, the total trade deficit of $513.58 billion was running 11.60 percent ahead of last year’s rate and is already higher than the full year total of $504.79 billion. The current post-2008 high for the overall trade shortfall is only $548.63 billion, reached in 2011.

>The November combined goods and services trade deficit total represented a 3.24 percent increase over the upwardly revised October figure of $48.91 billion.

>The monthly trade deficit has now risen sequentially three straight times after falling for four straight times.

>One big driver of the trade gap’s monthly rise was a 46.11 percent sequential jump in the U.S. oil trade deficit. The $1.51 billion increase, from just under $3.27 billion to just over $4.77 billion, accounted for nearly 95 percent of the trade shortfall’s monthly deterioration.

>But also contributing were several all-time deficit and import records in various components of overall U.S. trade flows.

>U.S. overall imports set their second straight monthly record in November, with the $250.72 billion topping October’s $244.7 billion by 2.46 percent.

>Monthly goods imports of $205.46 billion amounted to a record, too – surpassing the previous all-time high of $202.37 billion, set in April, 2014, by 1.53 percent.

>The record November deficit in high tech goods of $15.53 billion was a second straight all-time high as well. It eclipsed October’s $13.82 billion by 12.37 percent.

>In fact, this performance has already propelled this shortfall to a new annual record of $100.33 billion – 1.63 percent higher after 11 months than 2011’s 12-month total of $98.72 billion.

>New monthly deficit records were also set in the non-oil goods deficits on both an inflation-adjusted and pre-inflation-adjusted basis. Both reflect significantly reflect on the performance of U.S. trade policy, since they’re comprised of trade flows heavily influenced by trade agreements and similar decisions. And the continued deterioration of these “Made in Washington” trade deficits indicates that President Trump still faces major challenges in transforming America’s approach to the global economy.

>In addition, the inflation-adjusted figure is part of the calculation of the most closely-followed measure of America’s gross domestic product and its changes, and the November results suggest that trade will return to its typical role as an American economic growth killer in the fourth quarter of this year.

>In current dollars, the non-oil goods deficit rose sequentially to its second straight monthly record, with the November $65.22 billion figure standing 0.35 percent higher than October’s upwardly revised $64.99 billion.

>The real non-oil goods deficit also achieved its second straight monthly record in November, as it also increased by 0.35 percent on month to $65.66 billion. This trade shortfall is running 5.65 percent ahead of last year’s pace.

>As a result, the trade drag on the current economic recovery is likely to increase in the fourth quarter from the final third quarter figure of 16.36 percent – representing $459.9 billion worth of after-inflation growth lost since the recession officially ended in mid-2009.

>Interestingly, these developments were so adverse that they more than offset the effects of several record export totals.

>Specifically, a 2.27 percent sequential rise in total exports in November brought them to a new monthly record of $200.22 billion – fractionally higher than the previous all-time best of $200.14 billion from October, 2014.

>Moreover, the services sector set its second straight monthly exports record, with the November figure of $65.66 billion inching past October’s $65.60 billion.

>In addition, goods exports in November rose to their best level ($134.57 billion) since November, 2014’s $135.75 billion.

>The huge and longstanding U.S. manufacturing trade deficit retreated in November from the all-time record it set in October ($88.98 billion). But at $86.20 billion, it still represented the second highest total on record.

>Manufacturing exports fell 1.02 percent on month in November, to $92.88 billion. Manufacturing imports dropped nearly twice as fast – by 2.05 percent, to $179.08 billion.

>Year-to-date, the manufacturing trade deficit is running 6.85 percent seven percent ahead of 2016’s record total of $863.07 billion – which was an all-time high.

>On year between January and November, manufacturing exports have increased by 4.19 percent, and imports have risen by 5.45 percent.

>The massive, longstanding U.S. merchandise trade deficit with China rose by only 0.57 percent month-to-month in November. But the $35.43 billion figure did represent the third highest monthly total on record.

>U.S. goods imports from China in November fell by a mere 0.10 percent from October’s all-time high of $48.20 billion to $48.15 billion.

>U.S. goods exports to China’s fast-growing economy decreased much faster – by 1.93 percent, to $12.72 billion.

>Year-to-date, the China goods deficit is running 7.86 percent ahead of last year’s total – and 1.50 percent ahead of the 2015 rate, which eventually set the current annual record.

Our So-Called Foreign Policy: The Case for a “Made in America” Approach

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Africa, AIDS, border security, climate change, corruption, diseases, foreign policy, foreign policy establishment, globalism, HIV, human rights, internationalism, Iran, Iran deal, Islamic terrorism, Israel, Jeffrey Goldberg, Joseph S. Nye, Jr., Middle East, missile defense, nuclear proliferation, oil, Our So-Called Foreign Policy, population control, Project-Syndicate.org, shale, terrorism, The New York Times, Thomas Friedman

I’m picking on New York Times uber-pundit Thomas Friedman again today – not because of any personal animus, but because, as noted yesterday, he’s such an effective, influential creator of and propagandist for the conventional wisdom on so many public policy fronts. And just to underscore that it’s nothing personal, I’ll also put in my cross-hairs another, though lower profile, thought leader: Harvard political scientist Joseph S. Nye, Jr. The reason? Both recently have provided us with quintessential illustrations of how lazy – and indeed juvenile – the justifications for American international activism served up by the bipartisan foreign policy establishment have grown.

The analyses I’m talking about aren’t quite as childishly simplistic as the establishment theme I wrote about last month – the assumption that American involvement in alliances and international organizations and regimes is automatically good, and that withdrawal or avoidance is automatically bad. But because it’s a little more sophisticated, it can be even more harmful. It’s the insistence that whenever the United States faces a problem with an international dimension, the remedy is some form of international engagement.

A recent Friedman column revealed one big weakness with this assumption: It often logically leads to the conclusion that a problem is utterly hopeless, at least for the foreseeable future. Just think about the only sensible implications of this October 31 article, which insists that the apparently metastasizing threat of Islamic terrorism in Africa can’t be adequately dealt with through the military tools on which the Trump administration is relying.

Why not? “Because what is destabilizing all of these countries in the Sahel region of Africa and spawning terrorist groups is a cocktail of climate change, desertification — as the Sahara steadily creeps south — population explosions and misgovernance.

“Desertification is the trigger, and climate change and population explosions are the amplifiers. The result is a widening collapse of small-scale farming, the foundation of societies all over Africa.”

I have no doubt that Friedman is right here. And as a result, he has a point to slam the Trump administration “for sending soldiers to fight a problem that is clearly being exacerbated by climate and population trends….” (That’s of course a prime form of American international activism.)

But he veers wildly off course in suggesting that other forms of such activism – “global contraception programs,” “U.S. government climate research” and the like are going to do much good, especially in the foreseeable future. Unless he supposes that, even if American policies turned on a dime five or even ten years ago, Africa would be much less of a mess? The only adult conclusion possible is that nothing any government can do is going to turn the continent into something other than a major spawning ground for extremism and refugees.

And this conclusion looks especially convincing considering the African problem to which Friedman – and so many other supporters of such approaches – gives short shrift: dreadfully corrupt governments. For this is a problem that has afflicted Africa since the countries south of the Sahara began gaining their independence from European colonialists in the late-1950s. (And the colonialists themselves weren’t paragons of good government, either.)

So I’m happy to agree that we shouldn’t pretend that sending American special forces running around Africa helping local dictators will actually keep the terrorists under control (although as I’ve argued in the case of the Middle East, such deployments could helpfully keep them off balance). But let’s not pretend that anything Friedman supports will help, either – at least in the lifetime of anyone reading this.

Nye has held senior government foreign policy posts in Democratic administrations and, in the interests of full disclosure, we have crossed swords in print – mainly about the proper definition of internationalism and about a review of an anthology he edited that he didn’t like (which doesn’t seem to be on-line). But I hope you agree that there’s still a big problem with his November 1 essay for Project-Syndicate.org about the implications of America’s domestic energy production revolution for the nation’s approach to the Middle East.

In Nye’s words: “Skeptics have argued that lower dependence on energy imports will cause the US to disengage from the Middle East. But this misreads the economics of energy. A major disruption such as a war or terrorist attack that stopped the flow of oil and gas through the Strait of Hormuz would drive prices to very high levels in America and among our allies in Europe and Japan. Besides, the US has many interests other than oil in the region, including nonproliferation of nuclear weapons, protection of Israel, human rights, and counterterrorism.”

Two related aspects of this list of reasons for continued American engagement in the region stand out. First, it’s completely indiscriminate. And second, for this reason, it completely overlooks how some of these unmistakably crucial U.S. interests can be much more effectively promoted or defended not through yet more American intervention in this increasingly dysfunctional region, but through changes in American domestic policies.

For instance, we’re (rightly) worried about nuclear proliferation, especially in Iran? How can today’s engagement policy help? Even if the the current Iran nuclear deal works exactly as intended, what happens when it runs out? Should we simply assume that Tehran will be happy to keep its nuclear genie in a bottle for another fifteen years? Will Iran be persuaded to give up the nuclear option permanently if Washington cultivates even closer ties with its age-old Sunni Muslim enemies, like Saudi Arabia?

Although I’m a missile defense skeptic – especially when it comes to the near-term threat from North Korea – isn’t figuring out a more effective way to repel an Iranian strike more likely to protect the American homeland? It’s certainly a response over which the United States will have much more control – and indeed, any control. In addition, if the United States withdraws militarily from the Persian Gulf region, Iran’s reason for launching such an attack in the first place fades away and, as I’ve argued in the case of North Korea, America’s own vastly superior nuclear forces become a supremely credible deterrent for any other contingencies.

Of course the United States faces a big Middle East-related terrorism problem. But as I’ve argued previously, the keys to America’s defense are serious border security measures. They, too, pass the “control test” with flying colors, and consequently seem much more promising than the status quo approach of trying to shape the region’s future in more constructive ways. But as I’ve also written, it would also make sense to keep in the Middle East small-scale American forces whose mission is continually harassing ISIS and Al Qaeda and whatever other groups of vicious nutballs are certain to appear going forward.

Nye’s point about the integration of global energy markets is a valid one. But in the same article, he acknowledges how the U.S. domestic energy revolution’s “combination of entrepreneurship, property rights, and capital markets” has changed the game for America. Why does he suppose that its effects won’t spread significantly beyond our borders?

As for Nye’s other two reasons for continued U.S. Middle East engagement, the notion that Washington can do anything meaningful to promote the cause of human rights simply isn’t serious, and Israel has amply demonstrated that, with enough American military aid, it can take care of itself.

Moreover, as you may recognize, the arguments for mainly focusing on border security to handle the Middle East terrorist threat applies to the African menace that’s preoccupying Friedman.

The main takeaway here isn’t that U.S. international engagement will never be needed to protect national security, safeguard the nation’s independence, or enhance its prosperity. It’s that Made in America approaches will turn out to be vastly superior in many cases – and certainly in many more cases than the bipartisan globalist foreign policy establishment recognizes. How long will it take for President Trump to get fully on board?

By the way, I first began exploring the idea of Made in America solutions to foreign policy problems and international threats when I read this article by current Atlantic Monthly Editor Jeffrey Goldberg. He argued in 1999 that the nation was making a big mistake ignoring Africa in its diplomacy because the continent was likely to become a source of deadly diseases sure to cross oceans and eventually afflict Americans and others; that “H.I.V., of course, is a particularly vicious warning shot”; and that it was high time for Washington to deal with “poverty, poor sanitation and political instability” as well as put “a global system of public health and disease surveillance in place.”

Not that Goldberg presented a stark either-or choice, but my reaction was “If we do need to figure out whether to place more AIDS-fighting emphasis on promoting African economic development, or on finding a cure through medical research, isn’t the latter much likelier to deliver major results much sooner?”

As is clear from the Friedman article, Africa’s array of problems continues unabated. And according to no less than the (devoutly globalist) Obama administration, as of last year, the United States was “on the right track to reach most of its “National HIV/AIDS Strategy” goals for 2020 – which seek an America that’s “a place where new HIV infections are rare” and where “high quality, life-extending care” is available.

(What’s Left of) Our Economy: U.S. Trade Deficit Falls Slightly in August as Strong Exports Outweigh Record Manufacturing Shortfall

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Canada, Census Bureau, China, European Union, exports, goods trade, imports, Japan, Made in Washington trade deficit, manufacturing, Mexico, non-oil goods trade deficit, oil, recovery, services, South Korea, Trade, trade deficit, Trump, {What's Left of) Our Economy

In August, the combined U.S. goods and services trade deficit declined by 2.67 percent sequentially to hit $42.40 billion – its lowest monthly level since September, 2016’s $38.47 billion. The improvement came even though several typical major engines of trade deficit growth worsened.

A new record was set for the chronic and huge manufacturing trade deficit, with its $82.15 billion August total topping the previous high (last November’s $80.75 billion) by 1.73 percent. The manufacturing-heavy China goods gap, meanwhile, grew to its highest monthly level ($34.89 billion) since September, 2015 ($36.29 billion). And the pre-inflation oil trade deficit, which has decreased dramatically in recent years, staged its strongest monthly rebound (jumping by 60.59 percent) since June, 2016 (60.84 percent). Pointing to a hurricane effect: the biggest monthly drop in current dollar oil exports (11.53 percent) since August, 2015 (12.62 percent).

Boosting the August trade performance was the new all-time high hit for services exports ($66.11 billion), the best overall monthly exports figure ($195.32 billion) since December, 2014 ($197.18 billion), and the best monthly goods exports reading ($129.21 billion) since April, 2015 ($129.72 billion). America’s goods trade deficits with Mexico and South Korea, both of which have been criticized by President Trump, increased sequentially in August (by 25.49 percent and 15.20 percent). And the longstanding Japan merchandise deficit grew by 13.49 percent on month.

But merchandise trade shortfall with Trump trade target Canada plummeted by 61.43 percent month-to-month, and the goods gap with the European Union fell by 7.92 percent. The latest figures on the growth-slowing impact of the Made in Washington trade deficit show that it’s weakened slightly (from slowing the U.S. economic recovery by 17.40 percent as of the first quarter of this year to cutting inflation-adjusted growth by 17.30 percent in the second quarter). The new August trade figures indicate that it might decline modestly again once third quarter GDP and September trade data are released.

Here are selected highlights of the latest monthly (August) trade balance figures released this morning by the Census Bureau:

>America’s combined goods and services trade deficit declined by 2.67 percent on month in August to its lowest level ($42.40 billion) since September, 2016 ($38.47 billion), as a new monthly record manufacturing trade shortfall and poor China and hurricane-related oil results were more than offset by strong export performances, including a new all-time high for services exports.

>The August manufacturing trade deficit of $82.15 billion was 1.73 percent greater than the previous record total of $80.75 billion, set last November.

>August manufacturing exports grew by a solid 6.82 percent on month, to $93.51 billion. But the far larger amount of imports rose by 5.07 percent, to $175.67 billion.

>Year-to-date, the manufacturing trade deficit is running 5.56 percent ahead of last year’s record pace. Manufacturing exports for the January-August period are up 4.04 percent, and imports have increased nearly as fast – 4.72 percent.

>Fueling these manufacturing trade results in August was a 3.99 percent month-to-month widening of America’s manufacturing-heavy trade deficit with China. The $34.89 billion total was the largest monthly figure since September, 2015’s $36.29 billion.

>U.S. goods exports to China improved sequentially in August by an impressive 8.75 percent, but merchandise imports, which are much greater, increased by 5.08 percent.

>Year-to-date, the merchandise deficit with China is 6.24 percent higher than last year’s total – which was the second largest annual figure ever.

>The pre-inflation U.S. oil trade deficit, which has nosedived in recent years thanks to the energy production revolution, rose in August from $3.02 billion to $4.85 billion. That 60.59 percent monthly increase was the biggest such rise since the 60.84 percent surge registered in June, 2016.

>Pointing to the effects of this year’s violent hurricane season, oil exports in August recorded their biggest monthly decrease (11.53 percent) since August, 2015 (12.62 percent).

>On a year-to-date basis, however despite the longer-term improvement, this oil shortfall is outpacing last year’s by a stunning 36.01 percent.

>The hurricane impact on oil was also suggested by the excellent export data produced by other major sectors of the economy.

>Services set a new overseas sales record in August, and reached their second all-time monthly high in the last three months. August’s $66.11 billion bested June’s $65.90 billion by 0.33 percent.

>Total U.S. exports improved by 0.42 percent, to $195.32 billion, and thereby hit their highest level since December, 2014’s $197.18 billion.

>Goods exports rose even faster sequentially in August, by 0.44 percent to $129.21 billion. The result was their strongest month since April, 2015 ($129.72 billion).

>Having set reform of the North American Free Trade Agreement (NAFTA) as a priority, President Trump no doubt noticed that the U.S. merchandise trade deficit with Mexico surged by 25.49 percent on month in August, to $6.18 billion. U.S. goods exports to Mexico were 5.73 percent higher in August than in July, but import growth was 9.68 percent.

>The year-to-date merchandise deficit with Mexico is so far 11.72 percent higher than in the first eight months of 2016.

>America’s merchandise trade deficit with South Korea, which has just this week agreed to substantive talks on modifying its bilateral trade deal with the United States, increased by 15.20 percent sequentially in August, to $2.22 billion.

>U.S. goods exports to South Korea actually sank by 8.21 percent on month – the biggest such decrease since January’s 21.51 percent. America’s merchandise imports from South Korea fell, too, and for the second straight month – but by only 0.70 percent.

>America’s merchandise trade deficit with South Korea is down so far this year by fully 28.07 percent on a year-to-date basis. But since the bilateral trade deal went into effect, in March, 2012, it’s nearly tripled.

>The U.S. merchandise trade deficit with Japan increased notably (13.49 percent) as well on month in August, to $6.55 billion.

>America’s goods exports to the world’s third biggest single national economy decreased by 5.52 percent month-to-month, while its goods imports rose by 4.02 percent.

>Year-to-date, this merchandise deficit with Japan is running 12.54 percent ahead of last year’s level.

>Better news came in merchandise trade with America’s other NAFTA partner, Canada. The U.S. deficit – which has been volatile recently – plummeted by 61.43 percent in August, to just $410 million.

>American goods exports to Canada improved by 12.50 percent. Imports climbed, too, but by only 9.06 percent.

>Year-to-date, though, the U.S. merchandise trade shortfall with Canada is running nearly three times ahead of last year’s rate.

>Improvement in August was also seen in American merchandise trade with the European Union (EU) – the world’s largest economic unit. On a monthly basis, the U.S. deficit narrowed in August by 7.92 percent, to $12.39 billion.

>U.S. goods exports to the EU advanced by 9.08 percent on month, while imports were up only 2.52 percent.

>Year-to-date, moreover, the American merchandise deficit with the EU is running 0.72 percent behind last year’s rate.

>The latest data for the growth drag on the still weak U.S. economic recovery of rising trade deficits are only from the second quarter. But by both major measures, they show that trade’s bite into the expansion is easing, but remains deep.

>Since the recovery began, in mid-2009, to the end of the second quarter of this year, the increase in the trade deficit has reduced cumulative after-inflation output during the expansion by 9.24 percent, or $247.30 billion. That’s down from the 10.04 percent, and $255.9 billion, as of the first quarter.

>The toll on the expansion attributable to U.S. trade policy is diminishing, too, but has been much higher. This Made in Washington deficit strips out of inflation-adjusted American trade flows energy and services – two sectors where trade policy and related decisions have had only marginal effects so far. The remainder of U.S. trade flows – of goods except oil – are heavily influenced by policy.

>Since the recovery’s onset, the rise of this Made in Washington deficit has cost the recovery $462.8 billion in lost growth in absolute terms – or 17.30 percent of the cumulative total. That’s down from a growth bite of 17.40 percent worth ($443.3 billion in absolute terms) for the first quarter.