Trade deficit hits highest level since 2008

Marie Harrington
February 7, 2018

The trade gap widened despite exports rising 1.8 percent and hitting an all-time high of $203.4 billion.

Trump has repeatedly threatened to terminate the North American Free Trade Agreement unless the pact linking Canada, Mexico and the United States can be changed to terms more favorable to Washington.

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.

Data released in Washington showed the US trade deficit hit a nine-year high in December. According to the Commerce Department, the foreign-trade gap in goods and services increased 5.3% from the prior month to a seasonally adjusted $53.1 billion in December, the highest level since October 2008.

"The president's initiatives inherently take time to come to fruition", he told reporters.

The trade gap also suggests that a 3% annual economic growth might be hard to achieve, since the Imports, which subtract from gross domestic product, could get a further boost from a $1.5 trillion tax cut package that became effective in January.

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The Commerce Department released figures on Tuesday that shows the trade gap in goods and services rose to $566 billion past year, the highest level since $708.7 billion in 2008.

Imports rose far faster than exports, adding 6.7 percent to reach $2.9 trillion, the highest level ever. Greater prosperity tends to result in increased consumer spending, often on foreign imports.

US merchandise exports to China and Mexico in 2017 were the highest on record - and so were imports.

The shortfall - the 11th in a row - exceeded the C$2.20 billion deficit predicted by analysts in a Reuters poll and was the seventh largest on record. America's merchandise-trade gap with China, the world's second-biggest economy, widened 8.1 percent in 2017 to a record $375.2 billion.

The jump in the so-called real trade deficit at the end of the year puts trade on course to be a drag on gross domestic product in the first quarter.

Economists said the rise in the United States trade deficit was mainly the result of higher demand from consumers and companies, showing that the U.S. economy gathered speed in 2017.

Other reports by TheSundaySentinel

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