WASHINGTON, Dec 6 — The US trade deficit hit a 10-year high in October as Americans used a stronger dollar to snap up record imports, the government reported today.
The result showed the trade gap has continued to swell despite the punitive tariffs imposed this year on allies and adversaries alike by US President Donald Trump, who has focused intently on the subject with the goal of reducing the deficit.
And that is likely to subtract from growth in the final quarter of 2018, economists say.
Amid Trump’s high-stakes trade war with Beijing, the total trade gap rose 1.7 per cent to US$55.5 billion (RM231.3 billion), driven by all-time high imports, according to the Commerce Department.
The deficit in goods trade with China likewise continued to expand, rising two per cent to US$38 billion, seasonally adjusted, as key exports like soybeans fell.
Without seasonal adjustments, the US-China trade gap hit an all-time record of US$43.1 billion.
Washington and Beijing have exchange steep tariffs on more than US$300 billion in two-way trade, locking both sides in a bitter conflict that has so far roiled industry and begun to eat into profits.
With markets increasingly unnerved by the trade war, the economic powers last week agreed to a 90-day truce while they seek to resolve Trump’s complaints of unfair trade practices — complaints shared by the European Union, Japan and others.
Drag on growth
The October figure handily overshot analyst expectations, and could confirm weaker GDP growth in the fourth quarter.
“The headline deficit is now at a 10-year high, with the non-oil deficit at a record level and rising steadily. Pumping up domestic demand with fiscal easing and picking fights with trading partners does that,” said economist Ian Shepherdson of Pantheon Macroeconomics.
Americans bought more medications and imported autos while also taking more vacations, benefiting from the stronger US currency.
Travel by Americans rose by US$200 million, driving up US services imports to a record US$46.9 billion.
The deficit in goods also was the highest on record at more than US$78 billion, as US imports of goods and services hit a record high as well, rising 1.5 per cent to US$266.5 billion.
Auto imports — another subject on which Trump is battling the European Union — likewise hit the highest level ever, at US$31.8 billion.
From January to October, the total trade deficit rose more than 11 per cent compared to the same period last year, and the gap in September was US$555 million bigger than initially reported.
Long-suffering soy exports, victim of China’s retaliatory tariffs since July, fell by another US$800 million in October while exports of aircraft and parts, also sensitive to trade relations, fell US$600 million.
Meanwhile, there were declines in imports of computers and telecommunications equipment but not enough to offset the strong gains in pharmaceutical and auto imports for the month. — AFP
Source: The Malay Mail Online