USA trade deficit hits the highest level in nine years in 2017

Posted February 07, 2018

Exports rose 1.8 percent to $203.4 billion in December from the previous month, led by record shipments of capital goods and gains in industrial supplies and materials.

The increased deficit will likely put pressure on the Trump administration to aggressively renegotiate trade deals and enact new policies, says the Post.

Analysts, however, said the broadening trade gap could cause downward revisions to GDP in the final quarter of 2017, taking the USA even further from Trump's goal of three-percent annual growth.

On Tuesday, U.S. Commerce Department has reported the monthly trade deficit for December 2017, which is the largest since the recession.

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The latest economic data look particularly bad for Trump who has made reducing the trade deficit a signature issue, saying countries unfairly take advantage of the United States, a position economists have criticized.

For the month of December alone, the trade deficit in goods and services rose 5.35% to 53.1 billion, a rise above analysts' expectations of 52.3 billion.

For the time being though, it should not provide reason to worry because growing imports went along with rising USA exports past year.

The deficit surged 12.1% to $566 billion in 2017, the highest since 2008, which represented 2.9% of GDP, up from 2.7% in 2016.

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The numbers come after Trump claimed in his State of the Union address that the USA had "finally turned the page on decades of unfair trade deals that sacrificed our prosperity and shipped away our companies, our jobs, and our nation's wealth". Strong consumer demand drives imports higher, effectively exporting US prosperity to China and other exporters. Total imports rose 2.5 percent sequentially, driven by consumer goods and automotive.

America's shortfall in trade with the rest of the world widened at the end of 2017 as imports continued to run ahead of exports, boosted by strong domestic demand. The deficit in goods with China jumped 8.1 percent hit a record $375 billion.

"Right now, the same trade policy that Trump attacked ferociously and promised to speedily replace is still in place", said Lori Wallach, director and founder of Public Citizen's Global Trade Watch.

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