US Trade Deficit Surged to 10-Year High In December
The United States’ trade deficit surged to a 10-year high in December, reaching $59.8 billion despite the Trump administration’s efforts to end and renegotiate trade deals the president claims place the nation at an economic disadvantage.
Figures released by the Commerce Department Wednesday also show that for all of 2018 the trade deficit was $621 billion, up from $552.2 billion in 2017.
Since taking office the administration has insisted reining in the trade imbalance between the U.S. and other major world economies would help revive American manufacturing and related sectors and lead to a prolonged period of robust economic growth.
But with each successive report during Trump’s presidency, the trade deficit has only continued to grow.
On an annual basis, the trade gap in 2018 reached the largest total since 2008, when it was $708.7 billion, the Commerce Department said.
The $59.8 billion jump in December was the widest monthly gap in trade reported since October 2008. It represented a $9.5 billion increase over the $50.3 billion in November.
The widening of the trade deficit was due to a 2.1 percent increase in imports to $264.9 billion and a 1.9 percent decrease in exports, to $205.1 billion the Commerce Department said Wednesday.
The numbers are a sign that slowing growth in Europe and China was reducing demand for U.S.-made aircraft and petroleum products at exactly the same time that a stronger dollar was inspiring Americans to buy more household goods and computers and cell phones produced overseas.
Wednesday’s report will likely be most frustrating to the White House when it comes to China. In September, the Trump administration imposed tariffs on over $250 billion worth of Chinese goods to pressure Beijing to reduce the trade deficit between the two countries and to stop the theft of intellectual property.
China retaliated by imposing tariffs on $60 billion of U.S. goods.
The face-off actually contributed to a widening of the gap as U.S. companies sought to import more goods from China ahead of Trump’s initial plan to raise duties on $200 billion of Chinese products from 10 percent to 25 percent on Jan. 1.
Trump delayed the planned tariff increase to March 2 and recently postponed it indefinitely, asserting that ongoing talks with China had made substantial progress towards a deal.
But how the talks were shaking out was very much an unknown in December, and buying in the face of uncertainty pushed the trade deficit between the two countries to $38.7 billion in December and $419.2 billion for the year – an all-time record.
The trade deficit with China was also the largest of any nation.
The next highest deficit was between the U.S. and the European Union (at $15.8 billion), following by that between the U.S. and Mexico ($8.8 billion).
The United States ran a record surplus last year with South and Central America.
While it is just one indicator, economists tend to view a rising trade deficit as a drag on sustained future growth.
The dampening effect of Wednesday’s trade numbers will likely show up when the government issues its final calculations of the nation’s gross domestic product in the fourth quarter of last year. The initial estimate suggested the economy expanded by 2.6 percent during that three-month period.
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