US trade deficit hits highest in years

THE US trade deficit increased to a near nine-and-a-half-year high in February, with both exports and imports rising to record highs, but the shortfall with China narrowed sharply.

News of the worsening trade deficit comes as the United States and China are embroiled in titfor-tat tariffs which have rattled global financial markets. It also underscores the challenges confronting President Donald Trump’s ‘America First’ trade policies aimed at eradicating the deficit.

The Commerce Department said on Thursday the trade gap rose 1.6 per cent to $57.6bn, the highest level since October 2008. The deficit has now risen for six straight months. The goods trade deficit was the highest since July 2008 and the surplus on services was the lowest since December 2012.

Economists polled by Reuters had forecast the trade gap widening to $56.8bn (£40.45bn) in February. Part of the rise in the trade deficit in February reflected commodity price increases.

The politically sensitive goods trade deficit with China fell 18.6 per cent to $29.3bn. The deficit with Mexico surged 46.6 per cent in February.

The Trump administration has targeted 25 per cent tariffs on 1,300 Chinese industrial technology, transport and medical products, to force changes in Beijing’s intellectual property practices.