Trade deficit in US fails for first time in 6 years

The Commerce Department reported Wednesday that the US trade deficit declined in 2019 for the first time in six years as the ongoing trade dispute with China reduced imports but also cut exports and slowed overall economic growth.

The deficit in goods and services fell 1.7 percent last year to $616.8 billion, the first decline since 2013. That represented 2.9 percent of US gross domestic product — the value of all goods and services in a year — and is down from 3 percent in 2018, government statistics showed.

“I think this reflects fallout (from the trade dispute) and slower economic growth,” Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics in Washington, told China Daily in an email. “The gross domestic product (growth) number came in at 2.1 percent for the fourth quarter.”

President Donald Trump has consistently argued that reducing the US trade deficit would boost annual economic growth to 3 percent. But amid the ongoing trade dispute with China and a worldwide economic slowdown, the US economy grew by 2.3 percent in 2019 — the slowest rate in three years — after expanding by 2.9 percent in 2018.

Trump has sought what he believes are better terms in trade deals, scrapping the North American Free Trade Agreement and replacing it with the US-MexicoCanada Agreement. The US and China signed a phase one trade deal on Jan 15.

Trump imposed tariffs on Chinese goods valued at billions of dollars, including consumer products. This sharply reduced imports and cut the 2019 trade deficit with China by 17.6 percent to $345.6 billion.

But the trade deficit with the European Union increased to $177.9 billion last year, while the trade gap with Mexico climbed to $101.8 billion, both record highs.

The US is also shifting toward imports from Vietnam and South Korea.

The US imported 2.4 billion barrels of crude oil in 2019, the fewest since 1992, as domestic exploration and production reduced dependence on foreign suppliers.