U.S. trade deficit rises to five-month high on declining
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[September 05, 2018]
WASHINGTON (Reuters) - The U.S.
trade deficit increased to a five-month high in July as exports of
soybeans and civilian aircraft declined and imports hit a record high,
suggesting that trade could be a drag on economic growth in the third
The Commerce Department said on Wednesday the trade gap jumped 9.5
percent to $50.1 billion, widening for a second straight month. Data for
June was revised to show the trade deficit rising to $45.7 billion,
instead of the previously reported $46.3 billion.
The politically sensitive goods trade deficit with China surged 10
percent to a record $36.8 billion.
Economists polled by Reuters had forecast the overall trade deficit
swelling to $50.3 billion in July. The trade gap continues to widen
despite the Trump administration's "America First" policies, which have
left the United States embroiled in tit-for-tat tariffs with the
European Union, Canada and Mexico as well as an escalating trade war
President Donald Trump has defended the duties on steel, aluminum
imports and a range of Chinese goods as necessary to protect American
industries from what he says is unfair foreign competition.
The administration says eliminating the trade deficit will put the
economy on a sustainable path of faster growth, an argument that has
been dismissed by economists as flawed given constraints such as low
productivity and slow population growth.
The United States and China have slapped retaliatory tariffs on a
combined $100 billion of products since early July, with more in the
pipeline, posing risks to both domestic and global economic growth.
The trade gap narrowed in April and May as farmers front-loaded soybean
exports to China before Beijing's retaliatory tariffs came into effect
in early July.
When adjusted for inflation, the trade gap increased to a five-month
high of $82.5 billion in July from $79.3 billion in June. July's
so-called real trade deficit is above the second-quarter average of
$77.5 billion. If that trend continues in August and September, trade
could subtract from third-quarter gross domestic growth.
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A truck hauls a
container at the port of Los Angeles in Los Angeles, California,
U.S. July 16, 2018. REUTERS/Mike Blake/File Photo
Trade contributed 1.17 percentage points to the economy's 4.2 percent annualized
growth pace in the second quarter.
In July, the trade gap with Mexico narrowed 25.3 percent to $5.5 billion while
the shortfall with Canada shot up 57.6 percent to $3.1 billion. The trade
deficit with the European Union soared 50 percent to a record high of $17.6
In July, exports of goods and services fell 1.0 percent to $211.1 billion.
Soybean exports dropped $0.7 billion and shipments of civilian aircraft
decreased $1.6 billion. Petroleum exports, however, were the highest on record.
Imports of goods and services increased 0.9 percent to a record $261.2 billion
in July. They were boosted by imports of computers and computer accessories. The
import bill was also inflated by petroleum imports, which were the highest since
December 2014. The surge reflected higher oil prices.
The price of imported crude oil averaged $64.63 per barrel in July, up from
$62.42 in June. There were also increases in imports of automobiles and parts as
well as other goods. Pharmaceutical preparations imports, however, fell $1.3
(Reporting By Lucia Mutikani; Editing by Andrea Ricci)
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