The US trade deficit hit a 10-year high in December, dealing a blow to US President Donald Trump's efforts to restrict imports, especially from China, with protectionist trade tariffs
The US trade deficit hit a 10-year high in December, dealing a blow to US President Donald Trump's efforts to restrict imports, especially from China, with protectionist trade tariffs. The gap between the goods US companies sell to China and Chinese imports ballooned to a record $419 billion, while the total deficit in goods with all countries jumped to $891 billion.
A surplus in services trade was unable to prevent the overall deficit for 2018 from rising nearly 19 per cent in December to a decade-long high of $621 billion, the commerce department said.
With US consumers continuing to demand imported phones, laptops and computer accessories, mostly from China, analysts said the trade gap was likely to widen further and forecast that the US president could now redouble his efforts to impose tariffs, The Guardian, UK reported.
Exports, which fell for a third month in a row, also weakened in response to slowing global demand and a strong dollar, which is making US-made goods less competitive on the international market.
Chris Beauchamp, chief market analyst at the spread-betting firm IG, said Trump's $1 trillion of tax cuts and higher government spending had boosted domestic consumption and increased imports. At the same time, the high value of the dollar had discouraged foreign buyers from purchasing US-made goods, 'making a mockery of the White House's push to reduce the trade deficit'.
But he warned investors to expect the president to 'up the ante' in a bid to distract attention from the deteriorating trade situation.
'The chances of a deal with China this month look a bit weaker now, while more trade conflict with Europe seems increasingly likely. The assumption now is that trade wars will intensify, and that growth will suffer as a result,' Mr Beauchamp said.
The trade deficit has worsened despite the White House's protectionist trade policy, which the president put in place last year, saying it would shield US manufacturers from unfair foreign competition.
The US received record imports from 60 countries in 2018, led by China, Mexico and Germany. Imports of goods hit a record $2.6 trillion last year.
The US economy grew 2.6 per cent on an annualised basis in the last quarter of 2018, slowing from the third quarter's brisk 3.4 per cent.
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