US trade gap with China swells to record US$375bBusiness | 7 Feb 2018 11:48 am
US President Donald Trump campaigned on a promise to overturn trade policy and bring down the country’s massive, persistent trade deficits.
After a year in the White House, he still has a lot of work to do.
The Commerce Department reported Tuesday that the U.S. trade deficit in goods and services grew by 12 percent to US$566 billion last year, biggest since 2008. A record US$2.9 trillion in imports swamped US$2.3 trillion in exports last year.
The deficit in the goods trade with China — frequently accused of unfair trading practices by the White House — hit a record US$375.2 billion in 2017. The goods gap with Mexico climbed to US$71.1 billion.
"Trump’s trade team has not been able to stem the flood of imports into the country yet,” said Chris Rupkey, chief financial economist at MUFG Union Bank.
The trade gap grew even though the U.S. dollar dropped nearly 7 percent last year against the currencies of its major trading partners, a move that gives U.S. companies a price edge in foreign markets and makes imports pricier in America.
Dean Baker, senior economist at the left-leaning Center for Economic and Policy Research, says it takes time for a weaker dollar to have an impact on the trade balance.
Commerce Secretary Wilbur Ross said the trade deficit "ultimately will be reduced” by a combination of new or renegotiated trade pacts and a crackdown on abusive foreign trade practices. He cited the administration’s decision last month to impose tariffs on cheap Chinese solar panels and South Korean washing machines. But Ross said "it is not practical to set an exact deadline” for narrowing the trade gap.
Countries run trade deficits when they buy more products from other countries than they sell and run surpluses when they export more than they import. The United States has not turned a trade surplus since 1975, when Gerald Ford sat in the White House and "Jaws” ruled the box office.-AP