Select date

May 2024
Mon Tue Wed Thu Fri Sat Sun

U.S. trade deficit rises to nine-year high on robust imports

6-2-2018 < Blacklisted News 45 275 words
 

WASHINGTON (Reuters) - The U.S. trade deficit widened more than expected in December to its highest level since 2008, as robust domestic demand pushed imports to a record high, potentially putting pressure on the Trump administration as it renegotiates trade deals.


The import-driven surge in the trade gap reported by the Commerce Department on Tuesday also suggests a 3 percent annual economic growth may be hard to achieve. Imports, which subtract from gross domestic product, could get a further boost from a $1.5 trillion tax cut package that became effective in January.


The fiscal stimulus comes when the economy is almost at full employment, which means the resulting increase in demand will likely be satisfied with imports.


“When an economy is at full employment, an acceleration in demand tends to be accompanied by a pickup in import growth and a wider trade deficit,” said John Ryding, chief economist at RDQ Economics in New York.


The trade deficit increased 5.3 percent to $53.1 billion, the highest level since October 2008. Economists polled by Reuters had forecast the trade gap widening to $52.0 billion in December. Part of the rise in the trade gap reflected higher commodity price increases.


The deficit surged 12.1 percent to $566.0 billion in 2017, the highest since 2008. That represented 2.9 percent of GDP, up from 2.7 percent in 2016.


The politically sensitive U.S.-China trade deficit increased 8.1 percent to a record $375.2 billion last year.


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.


Read More...


Print