Soaring imports push U.S. trade deficit to nine-year
high
Send a link to a friend
[February 06, 2018]
WASHINGTON (Reuters) - The U.S.
trade deficit widened more than expected in December, hitting its
highest level since 2008 as robust domestic demand pushed imports to a
record high.
The Commerce Department said on Tuesday the trade gap increased 5.3
percent to $53.1 billion. That was the highest level since October 2008
and followed a slightly upwardly revised $50.4 billion shortfall in
November.
Economists polled by Reuters had forecast the trade deficit rising to
$52.0 billion in December after a previously reported $50.5 billion in
the prior month. Part of the rise in the trade gap in December reflected
commodity price increases.
The deficit surged 12.1 percent to $566.0 billion in 2017, the highest
since 2008. The politically sensitive U.S.-China trade deficit increased
8.1 percent to a record $375.2 billion last year.
U.S. President Donald Trump has vowed to shrink the trade gap through
his "America First" trade policies, which aim to shut out more unfairly
traded imports and renegotiate past U.S. free trade agreements.

Trump has repeatedly threatened to terminate the North American Free
Trade Agreement unless the pact linking Canada, Mexico and the United
States can be changed to terms more favorable to Washington. And his
administration has launched an investigation into China's intellectual
property practices that could lead to major new trade sanctions on
Beijing.
The surge in the December trade deficit was flagged by an advanced goods
trade deficit report published in late January. When adjusted for
inflation, the trade deficit increased to $68.4 billion from $66.5
billion in November.
The jump in the so-called real trade deficit at the end of the year puts
trade on course to be a drag on gross domestic product in the first
quarter. Trade subtracted 1.13 percentage point from GDP growth in the
final three months of 2017.
The economy grew at a 2.6 percent annualized rate during that period,
helping to lift growth in 2017 to 2.3 percent from 1.5 percent in 2016.
BROAD TARIFFS
The Trump administration believes a smaller trade deficit, together with
deep tax cuts, could boost annual economic growth to 3 percent on a
sustained basis. Late in January, Trump imposed broad tariffs on
imported solar panels and large washing machines, and is considering
slapping tariffs or quotas on steel and aluminum for national security
reasons.
[to top of second column] |

Shipping containers are
seen at the Port Newark Container Terminal in Newark, New Jersey,
U.S. on July 2, 2009. REUTERS/Mike Segar/File Photo

Such actions may prove politically popular with Trump's working-class
supporters, particularly in states hard-hit by factory closures and import
competition. But economists say they would likely do little to change the growth
trajectory of the overall trade deficit, which is tied more to macroeconomic
factors.
Goods imports increased 2.9 percent to a record $210.8 billion in December.
Imports of food, capital and consumer goods were the highest on record in
December. Imports are being driven by robust domestic demand, which grew at its
quickest pace in more than three years in the fourth quarter.
The country's import bill in December was also pushed up by more expensive crude
oil, whose average price of $52.10 per barrel was the highest since July 2015.
Imports from China fell 7.6 percent.
Exports of goods increased 2.5 percent to $137.5 billion in December, the
highest since October 2014. Exports of capital goods hit a record high. There
were also increases in exports of industrial supplies and materials. Petroleum
exports increased to their highest level since August 2014.
Exports are being boosted by a strengthening global economy. A weakening U.S.
dollar is also making American-made goods more competitive on the international
market.
Exports to China surged 7.5 percent to a record high in December. As a result,
the U.S.-China trade deficit declined 13 percent in December.
(Reporting by Lucia Mutikani and David Lawder; Editing by Paul Simao)
[© 2018 Thomson Reuters. All rights
reserved.] Copyright 2018 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
Thompson Reuters is solely responsible for this content.

 |