Excluding “Liberation Day” Tariff Distortions, Trade Deficit Biggest In History

Let’s check in on Trump’s Tariff Liberation policy.

International Goods and Services Trade

Today, the Census Bureau released the International Goods and Services Trade Report for August 2026.

• The goods and services deficit was $105.6 billion in August, up $12.7 billion from $92.8 billion in July, revised, up 13.7 percent.

• August exports were $315.2 billion, $4.5 billion more than July exports, up 1.4 percent.

• August imports were $420.8 billion, $17.2 billion more than July imports, up 4.3 percent.

• The August increase in the goods and services deficit reflected an increase in the goods deficit of $12.8 billion to $136.6 billion and an increase in the services surplus of less than $0.1 billion to $31.0 billion.

Imports

• Imports of goods increased $17.2 billion to $342.2 billion in August.

• Industrial supplies and materials increased $9.1 billion.

  • Crude oil increased $3.3 billion.

  • Nonmonetary gold increased $3.1 billion.

• Capital goods increased $6.2 billion.

  • Semiconductors increased $2.4 billion

  • Other industrial machinery increased $1.3 billion.

  • Computer accessories decreased $1.6 billion.
    

Exports

Exports of goods on a Census basis increased $4.2 billion.

• Industrial supplies and materials increased $6.3 billion.
  o Nonmonetary gold increased $2.3 billion.
  o Crude oil increased $2.0 billion.
  o Fuel oil increased $1.2 billion.

• Capital goods increased $1.3 billion.
  o Semiconductors increased $1.0 billion.
  o Computers increased $0.9 billion.
  o Computer accessories increased $0.9 billion.
  o Civilian aircraft decreased $1.0 billion.

• Consumer goods decreased $2.2 billion.
  o Pharmaceutical preparations decreased $2.4 billion.

Gold exports were 2.3 billion while gold imports were 3.1 billion.

Gold was not a factor this month.

Real Goods in 2017 Dollars

• The real goods deficit increased $8.7 billion, or 8.2 percent, to $114.7 billion in August, compared to an 11.1 percent increase in the nominal deficit.

• Real exports of goods increased $1.9 billion, or 1.3 percent, to $153.0 billion, compared to a
  2.1 percent increase in nominal exports.

• Real imports of goods increased $10.7 billion, or 4.1 percent, to $267.7 billion, compared to
  a 5.4 percent increase in nominal imports.

Liberation Day Flashback

On March 21, 2025, I commented Trump’s Tax Hike ‘Liberation Day’ Day Begins April 2. Expect to Suffer

The pre-shocks have begun. But the big shock is on deck.

“It’s a liberation day for our country because we’re going to be getting back a lot of the wealth that we so foolishly gave up to other countries, including friend and foe,” Trump told reporters on Monday.

Spokesman Kush Desai said in a statement. “President Trump has assembled the best and brightest trade team in modern American history to reignite American Greatness, and they are hard at work following the same playbook.”

Prepare for Liberation

Trump is about to liberate consumers from their money and countless small businesses from their companies.

History shows tariffs raise costs and prices and lead to lasting economic harm, such as lower production and living standards, whether we keep importing goods or switch to domestic alternatives.

How Reciprocal Tariffs Will Work

Trump quickly rolled back most of his tariffs when the stock market plunged and China retaliated with rare earth export restrictions.

Otherwise, the shock would have been big enough to cause a recession.

To refresh your memory, here is a A Clear Explanation of How Reciprocal Tariffs Will Work Were Supposed to Work.

Clear Q&A Example

For example, as of March 19, 2025, New Zealand generally does not have tariffs on U.S. wool under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a free trade agreement that includes New Zealand and the United States.

Q: Can I assume the US will not put a tariff on New Zealand wool?
A: Ha Ha. Reciprocal does not mean reciprocal, silly. It means whatever Trump says it means.

Q: For how long?
A: Good question. Perhaps a day, a week, a month, or hours. No one has any idea.

The Trump Trust Factor

Q: Why should any country believe Trump will honor any agreement he signs?
A: There is no reason and there is no trust. Trump tore up his own “best trade deal ever” USMCA.

What Can Go Wrong?

Don’t worry. The trade department has more than 200 people charged with devising the reciprocal tariff plan on 200 nations and 13,000 items. For those doing the math, that’s a 2,600,000 matrix.

But here’s the beauty of it all. Whatever the team decides, Trump can rectify at a moment’s notice, based on exchange rates, VATs, non-trade barriers, drugs, and what side of the bed Trump gets up on.

So nothing can possibly go wrong.

Final Q&A

Q: Can I have a synopsis.
A: Sure. Reciprocal means whatever Trump says it means whenever he says it!

How can that possibly not be perfectly clear?

Trump Theory vs Actual Results

• Trump Theory: Tariffs will reduce the trade deficit, balance the budget, provide so much money we can eliminate the income tax, and issue dividend checks to everyone.

• Actual Results: Tariffs did not balance the budget. Trump did not issue dividend checks. Tariffs increased inflation and stressed small businesses.

• Excluding tariff front-running ahead of the Liberation Day announcement, the trade deficit is the highest in history.

Don’t Worry, Here’s the Cure

Dividend Checks

The check is in the mail silly! I promise.

Meanwhile, is anyone feeling liberated from anything other than their money?