[CTC] Trade deficit hits highest level since 2008

Tue Feb 6 10:48:01 PST 2018

Two articles below…

http://thehill.com/policy/finance/372497-trade-deficit-hits-highest-level-since-2008 <http://thehill.com/policy/finance/372497-trade-deficit-hits-highest-level-since-2008>

Trade deficit hits highest level since 2008

BY VICKI NEEDHAM

02/06/18

The U.S. trade deficit surged to its highest level since 2008 during President Trump’s first year in office despite his vow to lower the gap and crack down on unfair competition.

The nation's trade gap in goods and services jumped 12.1 percent to $566 billion in 2017, up $61.2 billion from 2016, the highest level since the deficit hit $708.7 billion in 2008, the Commerce Department said Tuesday.

For the year, imports surged to $2.9 trillion, easily eclipsing the $2.3 trillion in U.S. exports.

Notably, the U.S. deficit in goods soared last year to a record-high $375.2 billion with China, a nation that Trump has both demonized and praised on trade during his tenure.

Trade gaps also increased with Mexico and Canada while the two nations continue working with the United States to update the North American Free Trade Agreement.

For December, the trade deficit increased to $53.1 billion, up from $50.4 billion in November, which was the highest level since October 2008.

Throughout his campaign and time in office, Trump has said he would wipe out deficits created by what he calls America's bad trade deals. He has vowed to remake the nation's trade policy to shift the biggest benefits to the United States.  

"Right now, the same trade policy that Trump attacked ferociously and promised to speedily replace is still in place,” said Lori Wallach, head of Public Citizen’s Global Trade Watch.   

“So far, the administration has not implemented the comprehensive new approach to our China trade policy that is needed," she said.  

Recently, Trump levied steep tariffs on imported solar panel technology and washing machines, which immediately boosted prices for U.S. consumers.

Alliance for American Manufacturing President Scott Paul said he shares Trump's "disdain for trade deficits," adding, “I can’t imagine the record goods deficit with China in 2017 is anything he’ll be crowing about." 

"But he can and certainly should do something about it," Paul said.

The president has to decide in the next couple months whether he will act on steel and aluminum case reports on his desk that argue for higher tariffs based on national security concerns, a move the U.S. has rarely used because of risks that U.S. exports could be hit with tariffs from other nations in retaliation.

Despite his fiery rhetoric against trade, the Trump administration made few inroads on trade policy outside of slapping higher tariffs on what they consider offending products coming in from nations such as China and Canada.

https://www.washingtonpost.com/news/wonk/wp/2018/02/06/trump-said-hed-shrink-the-trade-deficit-with-china-it-just-hit-a-record-high/?utm_term=.195dfd0feb59 <https://www.washingtonpost.com/news/wonk/wp/2018/02/06/trump-said-hed-shrink-the-trade-deficit-with-china-it-just-hit-a-record-high/?utm_term=.195dfd0feb59>

Trump said he’d shrink the trade deficit with China. It just hit a record high.
By David J. Lynch

February 6, 2018
The trade deficit with China hit a record high in 2017, defying President Trump’s repeated promises to shrink a number that he regards as a test of whether other nations are treating the United States fairly.

U.S. purchases of Chinese goods and services last year were $375 billion greater than Chinese orders from the United States, the Commerce Department said Tuesday.

Release of the new trade figures came one week after the president boasted in the State of the Union address that the U.S. had “finally turned the page on decades of unfair trade deals that sacrificed our prosperity and shipped away our companies, our jobs, and our Nation’s wealth.”

Union leaders who cheered the president’s promise to restore lost manufacturing jobs seized on the Commerce Department report as evidence that tougher action is required. “As a candidate, the president promised to reduce the trade deficit, end China's cheating, stop unfair trade in steel and aluminum, and reverse the tide of lost jobs due to trade,” said Leo Gerard, president of the United Steelworkers Union. “Despite many promises, workers are still waiting for a new approach.”

The overall U.S. trade deficit in goods and services with the rest of the world climbed to $566 billion last year, a 12.1 percent increase  over the prior year and the highest in nine years.

“This is the widest now since the recession,” said economist Chris Rupkey of MUFG Union Bank. “Worse than Obama's second term in office. Trump's trade team has not been able to stem the flood of imports into the country yet.”

Economists say that stronger U.S. economic growth last year enabled American consumers to buy more imported cars, appliances and computers. U.S. exports also rose, aided by the falling dollar, which makes American products less expensive for foreign customers. But the export jump fell short of the increase in imported goods.

Commerce Secretary Wilbur Ross acknowledged that the improved economy fueled the widening gap, but insisted that the president will eventually reduce the deficit through tougher enforcement and new trade deals.

“The president’s initiatives inherently take time to come to fruition,” he told reporters while visiting Florida's Kennedy Space Center. “...It will take a little time to take effect.”

The widening gap will likely increase pressure on the president to fulfill his repeated promises to take tough action against China and other U.S. trading partners. The U.S. also incurred deficits last year in its trade with the European Union ($151.4 billion), Mexico ($71.1 billion) and Japan ($68.8 billion.)

Trump says he wants trade relations to be ‘fair and reciprocal” and frequently cites the U.S. deficit with individual countries as proof that they are treating Americans unfairly. Administration officials are weighing possible actions against China over its handling of intellectual property and general moves to reduce surging imports of steel and aluminum.

Some trade experts worry that more aggressive U.S. measures will ignite a tit-for-tat cycle of retaliation.

“They raise the already high risk of new U.S. tariffs on Chinese imports, almost certainly to be quickly followed by a carefully targeted Chinese response,” said economist Mary Lovely of the Peterson Institute for International Economics. “Unfortunately, while destructive of jobs both here and in China, these responses will not move the needle on the U.S. trade deficit.”

So far, however, the president’s actions have fallen short of his rhetoric.

Upon taking office one year ago, he withdrew the U.S. from a Pacific trade deal and called for the 24-year old North American Free Trade Agreement to be renegotiated. Earlier this year, he imposed tariffs on imported solar panels and washing machines.    

“Right now, the same trade policy that Trump attacked ferociously and promised to speedily replace is still in place,” said Lori Wallach, director and founder of Public Citizen's Global Trade Watch.  “The first-year Trump jump in the U.S. trade deficit adds urgency to the administration actually securing a NAFTA replacement deal that ends NAFTA’s job outsourcing incentives and implementing a new China trade policy.”  

On Wednesday, several Republican members of the Senate Finance Committee are scheduled to meet with the president to press him on trade policy, including his NAFTA plans, according to Inside Trade.

Christian Davenport contributed to this report.

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