United States trade deficit soars to record high

United States trade deficit soars to record high

United States trade deficit soars to record high

The US trade deficit has hit a 10-year high, it was revealed on Wednesday in a government announcement, as Donald Trump's trade wars appeared to be backfiring. However, official data shows that while exports of United States goods and services rose by US$148.9bn a year ago, imports jumped by US$217.7bn.

Data released Wednesday morning by the Census Bureau shows that America's trade deficit increased by 12.5 percent during 2018, hitting $621 billion by the end of previous year (and $891 billion if only goods are considered, instead of goods and services combined).

While Trump frequently cites the deficit as evidence of the failure of his predecessors' trade policies - even though most economists don't dwell on the indicator - the gap has increased by US$119 billion during his two years as president. It's reported that both sides are close to reaching a deal that could include China's purchase of more than $100 billion worth of US goods every year, including agricultural and energy products.

He said there would either be "a good deal or it's not going to be a deal, but I think they're moving along very nicely".

Today, the USA economy is healthy, with economic growth relatively robust.

A trade deficit occurs when a nation's imports exceed its exports.

Trump has previously called the trade deficit "unsustainable" and said it represents a transfer of wealth from the United States to foreigners.

There are a few takeaways from this news, including that trade was probably a bigger drag on growth last year than previously forecast. While the United States and China are poised to negotiate a deal to end their trade dispute, the proposed deal amounts "much ado about nothing much", as Paul Krugman puts it. The president clearly obsesses about the trade deficit, but would he really prefer that the US economy not be humming along with both low inflation and also record low unemployment rates both overall and for just about every demographic group, even those demographic groups that solidly vote Democrat?

"The trade deficit is grossly misunderstood". Trump has taken measures to fight trade deficits, including urging companies to manufacture in the USA, and renegotiating trade deals with partners like the European Union and China.

Still, the biggest takeaway from the new trade data is not that the tariffs predictably failed to do what Trump thought they would; it's that the USA economy is powered by the individual decisions of millions of people and businesses, and that entity is far too complex and powerful to be controlled by the White House.

Gary Cohn, director of the National Economic Council for the first 15 months of Trump's administration, had been president and chief operating officer of Goldman Sachs for more than a decade before he agreed to become Trump's top economic adviser.

It means that the gap is the widest since 2008, when the global financial crisis hit and the U.S. fell into recession. The annual shortage of goods and services increased by 12.5 percent.

His approach was to try and discourage Americans from buying goods and services from overseas by introducing tariffs on them.

Analysts said the USA trade deficit will expand further.

The US merchandise trade deficit with China, which is now the focus of the Trump administration's trade policy, increased to $419.2 billion, the release said. It increased by 18.8 percent in December to nearly $60 billion, larger than economists' predictions, as exports fell by 1.9 percent and imports increased by 2.1 percent.

It is that trade statistic that now hangs over several ongoing trade discussions, including an expected trade summit with China toward the end of March, that could largely reshape America's participation in global commerce. Ironically, US exports to China declined but the US imported more Chinese goods.

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