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 Wednesday.
And 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.
Trump has angrily described trade deficits as a defeat for the United States, 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 percent to $891.3 billion, the highest level ever recorded.
Meanwhile, the overall trade deficit with the world, with services factored in, jumped 12.5 percent 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 percent 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 percent to a record $3.1 trillion in 2018.
Exports also rose, but not enough to chip away at the imbalance. Sales abroad increased 6.3 percent to $2.5 trillion last year, also the highest level ever.
And with the country is on its way to becoming 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 percent for the year to $18.2 billion amid a Chinese boycott sparked by Trump’s trade war.