WASHINGTON: The US trade deficit ballooned in August to its highest level in six months as exports of tariff-targeted goods fell while American consumers snapped up imported cars and mobile phones, the government said.
The result, which showed mounting pressures on trade from US President Donald Trump’s entrenched conflict with China, still came at a triumphant moment for the American leader, who has reveled in a new agreement to remodel North America’s trading system.
The August figures suggested retaliatory tariffs imposed by China continued to whipsaw American farmers, whose rural counties Trump’s Republican party traditionally counts on for political support.
The numbers also reflect reports that businesses have rushed to import goods before tariffs hit on China in late August and September, including importing products needed in stores for the holiday shopping season, driving up the trade gap.
Economists said the unexpectedly poor trade numbers could slow economic growth in the third quarter.
“Even adjusting for price changes, it looks like the trade deficit widened significantly in the third quarter, greatly slowing growth,” Economist Joel Naroff said in a client note.
With US imports of goods and services at their highest on record, the result pushed the goods deficits with China and Mexico to all time-highs, according to the Commerce Department report.
The total US trade deficit rose 6.4% over July to $53.2 billion, overshooting analyst forecasts which had called for a smaller five percent increase. That was on exports of $209.4 billion and record imports of $262.7 billion.
Despite Trump’s efforts to attack the trade deficit, so far this year it has risen 8.6% over the same period in 2017.
The gap in goods trade with China rose to $38.6 billion for August and with Mexico hit $8.7 billion — both the highest monthly totals ever.