US trade deficit surges to 10-year high in 2018

This comes despite slapping of tariffs by Washington on hundreds of billions in imports


Afp March 07, 2019
This comes despite slapping of tariffs by Washington on hundreds of billions in imports. PHOTO: REUTERS

WASHINGTON: The skyrocketing US trade deficit last year hit the highest level in a decade, a resounding failure for President Donald Trump's global trade offensive, government data showed on Wednesday.

America's merchandise trade deficit - the main focus of Trump's ire - surged to its highest level ever in 2018, as did the imbalance in goods trade with China, Mexico and the European Union - even after Washington slapped tariffs on hundreds of billions in imports from its largest trading partners.

The bulging deficit numbers come as US and Chinese officials say they are nearing a breakthrough in talks to end their trade war. Beijing is expected to offer to make eye-catching purchases of American agricultural goods to cut the trade deficit and please Trump.

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Trump has angrily described trade deficits as a defeat for the US and aimed to erase them, but the Commerce Department report was bristling with records as Americans snapped up mobile phones and companies invested in computer equipment in 2018.

The total US goods deficit surged 10.4% to $891.3 billion, the highest level ever recorded.

Meanwhile, the overall trade deficit with the world, with services factored in, jumped 12.5% to $621 billion as both imports and exports rose to their highest levels ever, according to the report. The deficit in 2017 was $552.3 billion.

In December alone, the total deficit also vaulted past expectations, surging 18.8% and likely weighing on an economy which already was slowing at the close of the year.

"We expect the slowdown in global growth to continue to weigh on exports and industrial production," Mickey Levy of Berenberg Capital Markets wrote in a note to clients. "In particular, economic weakness in China and Europe and trade-related uncertainties are dampening trade volumes."

In 2018, however, solid US growth, low unemployment and consumers' thirst for foreign products drove imports of goods and services up 7.5% to a record $3.1 trillion.

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Exports also rose, but not enough to chip away at the imbalance. Sales abroad increased 6.3% to $2.5 trillion last year, also the highest level ever.

With the country on its way to become a net energy exporter, crude sales abroad more than doubled to $47 billion.

But soybean exports, a crucial crop across vast expanses of the country, fell 18% for the year to $18.2 billion amid a Chinese boycott sparked by Trump's trade war.

American purchases of foreign autos, computers and machinery, and consumer goods, as well as food and animal feed, also were the highest ever.

Imports of goods ($2.6 trillion) and services ($557.9 billion) reached new all-time highs, the report showed.

Even as Washington and Beijing have exchanged punitive tariffs on more than $360 billion in two-way trade, the US deficit with China expanded to an even larger $419.2 billion, a new record.

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