US trade gap spikes in 2017
February 6, 2018
US President Donald Trump's first year in office saw the US trade gap leap to its highest level in seven years due to record imports. According to the fresh figures released by the US Commerce Department on Tuesday, the annual trade deficit in 2017 rose 12.1 percent, or $61.2 billion (€49.5 billion), to reach $566 billion.
The deficit grew especially strongly in the final month of the year, adding 5.3 percent to reach $53.1 billion in December, the highest since October 2008.
The news is likely to annoy US President Donald Trump, who has made narrowing the US trade deficit with the rest of the world one of his main goals. To achieve this, he has threatened to cancel trade agreements such as the TPP (Trans-Pacitic Partnership) with Pacific Rim countries and the North American Free Trade Agreement (NAFTA) with Canada and Mexico. He has also ratcheted up protectionist rhetoric towards China.
Read more: US 'America First' tariffs on washing machines and solar panels anger China, South Korea
Nevertheless, the goods trade deficit with Mexico increased to $71 billion, while that with China rose by $375 billion — the highest level on record.
US demand rising
Economists said the rise in the US trade deficit was mainly the result of higher demand from consumers and companies, showing that the US economy gathered speed in 2017. However, a broadening trade gap could also weigh on future growth as it might indicate a loss of US competitiveness.
For the time being though, it should not provide reason to worry because growing imports went along with rising US exports last year. Total US exports of goods and services in 2017 rose 5.5 percent to $2.3 trillion, their second highest level on record.
The US posted all-time record goods exports to 29 countries, with $243 billion exported to Mexico, $130 billion to China and $56.3 billion to the United Kingdom.
Imports rose faster though, climbing 6.7 percent for the year to reach $2.9 trillion, the highest level ever, according to the Commerce Department.
uhe/aos (Reuters, AFP, dpa)