US trade deficit jumps to 10-year high in 2018
WASHINGTON, March 6 - The U.S. trade deficit surged to a 10-year high in 2018, with the politically sensitive shortfall with China hitting a record peak, despite the Trump administration slapping tariffs on a range of imported goods in an effort to shrink the gap.
The Commerce Department said on Wednesday that an 18.8 percent jump in the trade deficit in December had contributed to the $621.0 billion shortfall last year. The 2018 deficit was the largest since 2008 and followed a $552.3 billion gap in 2017.
The trade deficit has deteriorated despite the White House's protectionist trade policy, which President Donald Trump said is needed to shield U.S. manufacturers from what he says is unfair foreign competition.
The United States last year imposed tariffs on $250 billion worth of goods imported from China, with Beijing hitting back with tariffs on $110 billion worth of American products, including soybeans and other commodities. Trump has delayed tariffs on $200 billion worth of Chinese imports as negotiations to resolve the eight-month trade war continue.
The United States has also slapped duties on imported steel, aluminum, solar panels and washing machines. The goods trade deficit with China increased 11.6 percent to an all-time high of $419.2 billion in 2018.
The December trade deficit of $59.8 billion was the largest since October 2008 and overshot economists' expectations for a $57.9 billion shortfall, as exports fell for a third straight month and imports rebounded.
The release of the December report was delayed by a 35-day partial shutdown of the government that ended on Jan. 25.
When adjusted for inflation, the goods trade deficit surged $10.0 billion to a record $91.6 billion in December. The jump in the so-called real goods trade deficit suggests that trade was probably a bigger drag on fourth-quarter gross domestic product than initially estimated by the government.
The government reported last week that trade subtracted 0.22 percentage point from GDP growth in the fourth quarter. The economy grew at a 2.6 percent annualized rate in the October-December quarter, slowing from the third quarter's brisk 3.4 percent pace.
The downbeat trade data joined weak December retail sales, construction spending, housing starts and business spending on equipment reports in setting the economy on a low growth trajectory in the first quarter.
The trade deficit in December was driven by 1.9 percent drop in exports of goods and services to a 10-month low of $205.1 billion. Exports are weakening because of slowing global demand and a strong dollar, which is making U.S.-made goods less competitive on the international market.
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Exports of industrial supplies and materials fell by $2.1 billion, with shipments of petroleum products dropping $0.9 billion and crude oil decreasing $0.5 billion. Exports of capital goods dropped $1.7 billion, led by a $1.0 billion decline in civilian aircraft shipments.
In December, imports of goods and services increased 2.1 percent to $264.9 billion, likely as businesses stocked up in anticipation of further duties on Chinese imports. Consumer goods imports jumped $2.4 billion, boosted by a $0.7 billion increase in imports of household and kitchen appliances.
Cellphone imports increased $0.6 billion. Capital goods imports increased $2.7 billion, with imports of computer accessories rising $0.7 billion. Computer imports also increased $0.7 billion.
(Reporting by Lucia Mutikani; Editing by Andrea Ricci)