USA trade deficit jumps in December

Violet Powell
February 7, 2018

The U.S. trade deficit increased by more than $61 billion in 2017, the Commerce Department announced on Tuesday - an expected rise that sparked wildly different reactions and interpretations of the Trump administration's effect on the economy. The administration is now renegotiating the North American Free Trade Agreement with Mexico and Canada, and Trump has repeatedly threatened to withdraw from the pact.

The US trade gap surged to its highest level in almost a decade during President Donald Trump's first year in office - more unwelcome economic news after Wall Street suffered historic losses, and setting up a test of confidence for his administration.

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.

For the full year, total US exports rose 5.5 percent to $2.33 trillion, while imports climbed 6.7 percent to a record $2.9 trillion.

USA merchandise exports to China and Mexico in 2017 were the highest on record - and so were imports. On the campaign, Trump was a vociferous critic of current US trade practices with China, but since he took office, he shifted his tone because he hopes the Chinese government will help reduce tensions with North Korea.

The US posted all-time record goods exports to 29 countries, with $243 billion exported to Mexico, $130 billion to China and $56.3 billion to the United Kingdom.

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The global trade balance deteriorated further in December as import growth continued to exceed that of exports. The president recently placed tariffs on imported solar panels and washing machines, sparking concern the USA may prompt trade wars. The trade deficit of the largest economy in the world is rising in 2017, mainly due to the strengthening of the economy.

The December goods-and-services gap was wider than the median estimate of economists surveyed by Bloomberg for $52.1 billion. Meanwhile, the exports went up 1.8% to $203.4 billion with the products like chemical grew, as well as capital goods like civilian aircraft.

Rising crude imports and a ballooning goods deficit with China, which hit its highest level on record at $375.2 billion, helped expand the trade gap, the Commerce Department reported.

"It was a flat month and not a great handover into 2018".

Despite his firery rhetoric against trade, the Trump administration made few inroads on trade policy outside of slapping higher tariffs on what they consider offending products from China to Canada.

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