Thu, Feb 08, 2018 - Page 10 News List

US trade deficit grows in face of Trump’s rhetoric

GOING SOUTH:The goods deficit with Mexico jumped 10 percent to US$71.1 billion, lifting the US’ southern neighbor past Germany and Japan into second behind China

Bloomberg

Try as he might, US President Donald Trump cannot contain the US’ ballooning trade deficit with China.

The US trade gap in goods with the Asian power last year surged 8.1 percent to a record US$375 billion, US Department of Commerce data released on Tuesday showed.

The total goods deficit with all nations swelled by the same percentage to US$796 billion.

Trump has repeatedly complained about the US’ trade deficit with China, expressing his disappointment with the growing shortfall in a recent telephone call with Chinese President Xi Jinping (習近平).

The US president has threatened a host of actions to constrain China, including tariffs on imports of steel and aluminum and penalties for misuse of US intellectual property.

In his first State of the Union address last week, Trump said the “era of economic surrender is over” and promised to negotiate better trade deals, and he named China an economic rival.

China stoked tensions this week by starting an anti-subsidy and anti-dumping probe into grain sorghum from the US.

Some economists have said it would be tough to reverse the trade imbalance with China without deep reforms that change the balance between investment and saving in each country.

US Republican-backed tax cuts passed late last year might exacerbate the trade shortfall by boosting the US dollar, making US exports more expensive, and by stoking domestic demand, which would also spur imports.

Last year, the US had record imports from 47 countries, led by China.

US exports to China rose to an all-time high of US$130 billion, from US$116 billion in 2016, although it was not enough to prevent the deficit from growing.

Last year’s trade totals are not likely to soften the US position on the North American Free Trade Agreement (NAFTA).

The goods deficit with Mexico increased by 10 percent to US$71.1 billion, causing the country to leapfrog Germany and Japan into second place, behind China.

The goods gap with Canada surged about 60 percent to US$17.6 billion, as the US’ northern neighbor rose from 16th to 12th place.

Negotiators from the US, Mexico and Canada last month wrapped up their sixth round of talks on a new NAFTA with modest signs of progress.

However, the US goods deficit with South Korea narrowed 17 percent to US$22.9 billion, dropping the Asian nation to 10th place from eighth.

The US is also renegotiating its 2012 free-trade deal with South Korea. The Trump administration is demanding changes to improve access for US exports, including automobiles.

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