ZCZC
BCN-16
US-TRADE-DEFICIT-INDICATOR
US trade deficit surges in July on record imports
WASHINGTON, Sept 6, 2018 (BSS/AFP) – The US trade deficit surged in July
on record imports that created burgeoning gaps with trading partners in the
crosshairs of President Donald Trump’s aggressive policies, according to
government data released Wednesday.
With US goods facing retaliatory tariffs in many countries, exports
dropped sharply that month, the Commerce Department reported, pushing the
trade deficit with China to an all-time high.
In addition to subtracting from growth, the high deficit could rekindle
Trump’s ever-present ire about how the United States is treated by its
trading partners, and prompt him to unleash steep tariffs on a massive amount
of Chinese goods this week.
“This report brings a record trade gap with China … which is unlikely to
soften the US stance on tariffs,” RDQ Economics said in a research note.
The US trade gap with the European Union also hit a record, coming just
days before US Trade Representative Robert Lighthizer is due to meet his EU
counterpart Cecilia Malstrom in Brussels on Monday to try to defuse the
dispute between the two major economies that have exchanged tariffs on
billions of dollars in goods.
The deficit with Canada also widened, according to the report released
shortly before Washington and Ottawa were due to resume talks aimed at
salvaging the North American Free Trade Agreement as a three-nation pact with
Mexico.
The difference between total US imports and exports of goods and services
jumped more than $4 billion, an increase of 9.5 percent, to $50.1 billion —
just a few hundred million shy of the consensus forecast among economists.
It was the second consecutive month that saw the deficit widen, following
the surge of exports in May amid a flurry of buying to outrun tariffs imposed
in US markets abroad.
The figures do not bode well for growth in the second quarter, although
other economic indicators point to healthy demand and expanding GDP.
It was also a month of multiple records in the trade data: imports of
goods and services were the highest ever, as were service exports.
MORE/HR/0955
ZCZC
BCN-17
US-TRADE-DEFICIT-INDICATOR 2 LAST WASHINGTON
– Record gaps –
The widening deficits are contrary to the stated goals of Trump’s
multifront trade confrontations.
The US president has imposed steep tariffs on steel and aluminum from key
trading partners, as well as punitive duties on $50 billion in annual imports
from China, with the possibility that another $200 billion will be targeted
as soon as this week.
And other factors are working against his goal of reducing the US trade
deficit, which he has said he views as stealing from the American economy.
With the Federal Reserve gradually raising interest rate, the US dollar has
strengthened, making US goods more expensive; and the massive corporate tax
cuts from last year tend to boost investment which means higher spending on
equipment.
RDQ Economics said “the US cannot enjoy an investment spending boom
without installing a significant amount of capital equipment and … this
means a surge in capital goods imports.”
US imports in July rose 0.9 percent to $261.2 billion, the highest ever,
including record purchases of both goods and services.
Exports fell one percent to $211.1 billion, including record shipments of
industrial supplies and petroleum, while sales of soybeans — subject to
Chinese retaliatory tariffs — dropped by $700 million.
Imports of petroleum hit the highest level in four years at $23.6 billion,
on the highest price in four years of an average $64.63 a barrel.
Exports and imports of autos both rose, but the volatile aircraft category
dropped $1.6 billion.
Meanwhile, the trade gap with China jumped to a record $36.8 billion, not
seasonally adjusted; the deficit with the EU hit a record $17.6 billion; and
the deficit with Canada jumped by $1 billion to $3.1 billion.
In contrast, the deficit with Mexico narrowed to $5.5 billion, a nearly $2
billion decline — although the total is up for the first seven months of the
year.
BSS/AFP/HR/1000