US Trade Deficit in December was the largest in Nine Years

07 February, 2018, 01:15 | Author: Roderick Gutierrez
  • US Trade Deficit Jumped by 12.1% in 2017

The US trade deficit rose to its highest level since 2008 in December as strong domestic demand led to surging imports. The goods deficit with China rose 8.1 percent to hit a record $375.2 billion in 2017, while the trade gap with Mexico rose to $71.1 billion.

Trump has often hit Mexico and China the hardest on trade, and his administration is now in the process of renegotiating the North American Free Trade Agreement (NAFTA).

The U.S. trade deficit widened more than expected in December, hitting its highest level since 2008 as robust domestic demand pushed imports to a record high.

Data released in Washington showed the US trade deficit hit a nine-year high in December.

Official data showed the U.S. deficit in goods and services jumped to $53.1bn in December, an increase of $2.7bn from November, and markedly higher than economists´ consensus forecasts for a deficit of $52bn.

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. "The first-year Trump jump in the US trade deficit adds urgency to the administration actually securing a NAFTA replacement deal that ends NAFTA's job outsourcing incentives and implementing a new China trade policy". While improving overseas growth and a weaker dollar bode well for exports, Trump's efforts to seek more favorable terms with US trading partners remain a work in progress, and his tax-cut legislation may cause the deficit to widen further.

The U.S. imported numerous foreign-made goods in 2017, many of which were produced in China.

At the same time, the latest trade figures also reflect the rising value of commodity imports due to higher commodity prices. "I am still optimistic that trade in 2018 will be positive, given the strength of global growth", said Ross Prusakowski, a senior economist at Export Development Canada.

Mnuchin said despite the recent declines the administration can take credit for double-digit increases since Trump's election in 2016, given its focus on policies to improve the economy's long-term performance.

Imports rose far faster than exports, adding 6.7 percent to reach $2.9 trillion, the highest level ever.



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