USA trade deficit surges to 10-year high in 2018

USA trade deficit surges to 10-year high in 2018

The U.S. trade deficit past year has surged to the highest level since 2008, according to a report by U.S. Commerce Department Wednesday.

Despite President Donald Trump's repeated promise to shrink trade deficits, it leaped by 12.2% to $621 billion in 2018, after hitting a record high during his first year in office.

However, 2018's deficit is higher than the $552.3bn recorded in 2017.

A senior Trump administration official asserted that progress had been made during trade talks over the past two weeks, only to acknowledge that the eventual outcome remains a mystery and that China faced no timetable for responding to the USA priorities.

Economists say the trade deficit is swelling because of broad economic forces, including a chronic shortfall in national savings that was exacerbated by last year's US$1.5 trillion corporate and personal income tax cut.

Trump has previously called the trade deficit "unsustainable" and said it represents a transfer of wealth from the United States to foreigners.

As Ben Walsh points out at Barron's, Wednesday's trade deficit figures strengthen the Trump administration's hand because they demonstrate that China has much more at stake than the U.S.in keeping tariffs from escalating. Mainly in retaliation against Trump's own tariffs on China.

US President Donald Trump, the self-proclaimed Tariff Man, is set to become the $100 Billion Man. US stock futures were marginally lower. The dollar's climb was partly due to a series of rate hikes by the Federal Reserve. American consumers and businesses have not stopped buying foreign goods, as the new data indicates, but they are paying higher prices for the privledge of doing so. That means Trump's presidency will have seen the U.S. trade deficit-the main metric by which his judges countries to be winning or losing-grow by more than $100 billion. Imports of goods and services increased 2.1 percent to $264.9 billion in December.

The relative strength of the United States economy means that it consumes more and imports more goods even as consumers and companies in China and Europe and the economies exposed to them consume less and import less.

The White House has argued that reducing the trade deficit would boost annual economic growth to its goal of 3 percent on a sustainable basis. Exports are weakening because of slowing global demand and a strong dollar, which is making USA -made goods less competitive on the worldwide market.

Cellphone imports increased 0.6 billion US dollars.

As trade talks with China advance, Trump has noticed the market gains that followed each sign of progress, said the people, who requested anonymity to discuss internal deliberations.

That's the bad news for the Trump administration and trade hawks.

The President has successfully negotiated new agreements with South Korea, North American neighbours Canada and Mexico, and appears close to a deal with China.

And with the country is on its way to becoming a net energy exporter, crude sales overseas more than doubled to $47 billion. If the tariffs led to the creation of 35,000 new manufacturing jobs - equal to all the steel and aluminum jobs lost in the past decade - they would cost US$195,000 per job, the study found.

The duties cost consumers $1.4 billion a month and businesses $3 billion a month by the end of past year, according to research released last week by Mary Amiti, an economist at the Federal Reserve Bank of NY, and economists from Princeton and Columbia universities.

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