US-China trade deficit hits a new high, fuelling trade fight
Canada sells 16 copters to Philippines
THE US trade deficit with China climbed to its highest level on record in 2017, a trend that could prompt the Trump administration toward tougher trade actions in the coming months.
The gap between Chinese goods imported to the United States and US goods exported to China rose to $375.2 billion last year, up from $347 billion the prior year, data released Tuesday morning by the Commerce Department showed.
The overall US trade deficit in goods and services with the world widened 12.1 percent to $566 billion last year, the largest gap since 2008.
Economists said the growing trade deficit stemmed largely from the strength of the US economy, which helped US consumers afford more imported electronics, clothes and appliances. The declining value of the dollar last year, which makes US products cheaper to buy overseas, also helped to lift exports, but not enough to prevent the gap from widening.
Still, the administration of President Donald Trump is likely to look critically on the trade data, which it has long cited as evidence of the decline of US manufacturing and a troubling reliance on foreign goods.
The figures could also strengthen the resolve of those in the administration who want the United States to take a more aggressive stance on trade and are urging tougher action on trading partners that export more to the United States than they import, like China, Mexico and South Korea.
After rolling out trade actions on washing machines and solar panels that were nominally aimed at China, the administration is considering sweeping action to protect US intellectual property from Chinese incursions. US negotiators are working to rewrite trade pacts with Mexico and South Korea, in large part because these countries run large bilateral trade surpluses with the US.
Some left-leaning groups that support the president’s promises to end offshoring embraced the view that the administration’s trade policies simply haven’t gone far enough.
“The same trade policy that Trump attacks ferociously and promised to speedily replace is still in place,” said Lori Wallach, director of Public Citizen’s Global Trade Watch. “It’s not surprising that the deficit is up because in Year 1, there has been a wide gulf between Trump’s fiery trade rhetoric and action.”
Despite Trump’s frequent promises to reduce the trade deficit, many economists believe his trade policies will be largely powerless to reverse the trend. That’s because the overall trade deficit is governed by macroeconomic factors, including the relative growth rates of countries, the value of their currencies, and their saving and investment rates. So while changes in trade policy can shift imports and exports from one country to another, for example, reducing the US trade deficit with China while increasing its trade deficit with Thailand, they are unlikely to reduce the trade deficit overall.
And Trump’s signature economic policy so far – the $1.5 trillion tax cut – is likely to widen the trade deficit in coming years by encouraging more investment in the United States, many economists say.
Bryan Riley, director of the Free Trade Initiative at the National Taxpayers Union, said an increase in the trade deficit from the prior year “should not be viewed as a problem to be fixed, but as a predictable result of a growing economy that enables people to afford more imports”.
Eswar Prasad, a professor of trade policy at Cornell University, cautioned against Trump’s interpretation of the bilateral trade deficit as a scorecard for an economic relationship.
Prasad said some persistent deficits, like the one China runs with many countries including the United States, could be a sign of structural imbalances, like China’s historic tendency to undervalue its currency. But bilateral trade balances can increase for many reasons, both bad and good – for example, if wealthier US consumers want to buy more stuff – making it a problematic metric for measuring fair trade. THE Philippines has bought 16 new Bell helicopters from Canada for about US$235 million to strengthen its fight against Islamic militants and other domestic insurgencies, defence officials said yesterday.
The two gover nments announced the deal less than three months after Canadian Prime Minister Justin Trudeau clashed with host President Rodrigo Duterte over Philippine drug war killings, on the sidelines of a Manila summit.
The Philippine defence department signed the 12- billion-peso (US$234.8 million) Bell 412EPI deal with the state-run Canadian Commercial Corp, with deliveries set to start in nine months, ministry spokesman Arsenio Andolong told AFP.
“These are multi-purpose aircraft for anti-terrorism as well as HADR,” he said, using military lingo that refers to disaster response and humanitarian missions.
Philippine troops and police, beset by Islamist and communist insurgencies, fought a fivemonth battle last year against Islamic State group supporters in the southern city of Marawi.
It is also faced with rising tensions over rival territorial claims in the South China Sea and has been upgrading its navy and air force in recent years. The country is also regularly battered by typhoons.
“These [helicopters] are a real benefit to Filipinos,” Canadian Ambassador John Holmes said on the mission’s Facebook page, adding it would boost Manila’s “search and rescue and disaster relief capabilities”.
The Philippine Defence Department acquired eight of the same Bell aircraft model in 2015, which it said went mostly to an air force unit assigned with providing air transport for the Philippine president.
The Filipino military also uses derivations of the Bell-UH-1H helicopter, which first saw service for the US military in theVietnam War in the early 1960s.
The two gover nments announced the deal less than three months after Duterte and Trudeau clashed.
Trudeau said during the November summit that he called out Duterte over “human rights, the rule of law, and specifically extrajudicial killings”.
Duterte, who has overseen a crackdown that has left nearly 4,000 drug suspects dead at the hands of the police, later described Trudeau’s comments as “a personal and official insult”, adding he would only answer to his Filipino electorate.