US trade deficit up to US$67.1 billion in August, 14year high

WASHINGTON (AP) — The US trade deficit rose in August to the highest level in 14 years.

The US Department of Commerce reported yesterday that the gap between the goods and services the United States sells and what it buys abroad climbed 5.9 per cent in August to US$67.1 billion, highest since August 2006. Exports rose 2.2 per cent to US$171.9 billion on a surge in shipments of soybeans, but imports rose more — up 3.2 per cent to US$239 billion and led by purchases of crude oil, cars and auto parts.

The US deficit with the rest of the world in the trade of goods such as airplanes and appliances set a record US$83.9 billion in August. The United States ran a surplus of US$16.8 billion in the trade of services such as banking and education, lowest since January 2012.

The politically sensitive deficit in the trade of goods with China fell 6.7 per cent to US$26.4 billion.

So far this year the United States has recorded a trade gap of US$421.8 billion, up 5.7 per cent from January-august 2019.

Hammered by the coronavirus and its fallout on the world economy, total US trade — exports plus imports — is down 15.1 per cent so far this year to US$3.2 trillion.

“Overall, trade flows remain subdued and the outlook is uncertain given a muted global growth and demand backdrop,” said Rubeela Farooqi, chief US economist at High Frequency Economics.

President Donald Trump campaigned on a pledge to bring down America’s persistent trade deficits. He imposed taxes on imports of steel, aluminum and most products from China, among other things; and renegotiated a North American trade pact in an effort to encourage more production in the United States.

But the trade deficit won’t yield easily to changes in trade policy. As the US economy recovers from springtime shutdowns, Americans are buying more imported goods while foreign demand for US products remains weak.

In an unusual move, US trade representative Robert Lighthizer issued a statement on the monthly trade deficit report, defending the president’s record.