Northwest Arkansas Democrat-Gazette
Trade deficit up 9.6% in January
Imports of mobile phones from China cited for part of gap
WASHINGTON — The U.S. trade deficit jumped in January to the highest level in nearly five years as a flood of mobile phones and other consumer products widened America’s trade gap with China. The result highlights the challenges facing President Donald Trump in fulfilling a campaign pledge to reduce America’s trade deficits.
The deficit in January rose 9.6 percent to $48.5 billion, up from a December deficit of $44.3 billion, the Commerce Department reported Tuesday. It was the largest monthly gap since a deficit of $50.2 billion in March 2012. A Bloomberg survey estimated a trade deficit of $43 billion to $49.6 billion.
U.S. exports edged up a slight 0.6 percent to $192.1 billion, helped by stronger auto sales. But that was swamped by a 2.3 percent surge in imports to $240.6 billion, led by mobile phones, oil and foreignmade cars.
During the campaign, Trump pledged to attack America’s persistent trade deficits, which he blamed for the loss of millions of goodpaying factory jobs. He has threatened to place punitive tariffs on imports from China, Mexico and other nations he has accused of trading unfairly. But economists worry that Trump’s tough talk could spark all-out trade wars in which foreign nations retaliate by adding tariffs on American goods.
Commerce Secretary Wilbur Ross said Tuesday that the latest data show “there is much work to be done” on trade agreements and enforcement. “President Trump has made free and fair trade a central part of his agenda, and correcting this imbalance is an important step in achieving that goal,” Ross said in a statement.
White House trade adviser Peter Navarro, a longtime critic of China’s trade practices, told an economists’ group Monday that reducing America’s trade deficits would deliver stronger economic growth and improve national security.
For January, the U.S. deficit with China increased 12.8 percent to $31.3 billion, the highest
level since September. The figure reflects a big rise in imports of mobile phones, clothing, televisions, toys and games.
Trump is now in a position to carry out his trade threats against China — should he decide to do so.
Specific measures against China will be announced “as soon as we have a proper
case prepared,” Ross said in a Bloomberg Television interview last week. The billionaire investor spoke just before Trump’s speech to Congress, which included promises to bring back “millions of jobs” and that “dying industries will come roaring back to life.”
Ross has said the U.S. won’t be bound by World Trade Organization decisions, according to a document obtained by Bloomberg News. The U.S. is seeking more “reciprocal”
trade with countries such as China and Germany in a bid to increase growth, reduce the trade deficit and keep production capacity out of foreign hands, Navarro said Monday.
American exporters have struggled over the past two years as a rising dollar has made their goods more expensive and therefore less competitive in overseas markets.
Economists believe if the dollar stabilizes this year, export growth should rebound,
reflecting in part stronger economic growth in many of America’s major export markets.
Andrew Hunter, U.S. economist for Capital Economics, said the big increase in the deficit in January likely signals that trade will drag overall growth in the first quarter. But he said the impact wouldn’t be as severe as in the fourth quarter, when trade trimmed growth by 1.7 percentage points.
And brighter days may be
ahead.
“With the headwind from the dollar’s prior appreciation having eased and global growth picking up quite sharply, the outlook for exports is better now than it has been in some time,” Hunter said.
The trade deficit is the difference between imports and exports. A rising deficit is a drag on overall economic growth because it means more products are being produced for domestic consumption
from overseas.
The trade deficit is expected to trim overall economic growth by around one-half percentage point this year. Many economists are looking for the U.S. economy to grow between 2 percent to 2.5 percent in 2017, up from an anemic 1.6 percent growth in 2016.