US trade gap at 10-yr high on record imports

WASHINGTON (AFP) – The US trade deficit hit a 10-year high in October as Americans used a stronger dollar to snap up record imports, the government reported Thursday.

The result showed the trade gap has continued to swell despite the punitive tariffs imposed this year on allies and adversaries alike by President Donald Trump, who has who has sought to shrink deficits he blames for job losses.

And that is likely to subtract from growth in the final quarter of 2018, economists say.

Amid Trump's high-stakes trade war with Beijing, the total trade gap rose 1.7 percent to $55.5 billion, driven by all-time high imports, according to the Commerce Department.

The deficit in goods trade with China likewise continued to expand, rising two percent to $38 billion, seasonally adjusted, as key exports like soybeans fell.

Without seasonal adjustments, the US-China goods trade gap hit an all-time record of $43.1 billion. Washington and Beijing have exchanged steep tariffs on more than $300 billion in total two-way trade, locking them in a bitter conflict that has so far roiled industry and begun to eat into profits.

With markets increasingly unnerved by the uncertainty surrounding the trade war, the two economic powers last week agreed to a 90-day truce while they seek to resolve Trump's complaints of unfair trade practices -- complaints shared by the European Union, Japan and others.

But Trump on Tuesday dubbed himself ''Tariff Man,'' and renewed threats to penalize Beijing should the two sides fail to reach a ''real deal'' to resolve the dispute.

The October trade deficit handily overshot analyst expectations, and could confirm weaker GDP growth in the fourth quarter.

''The headline deficit is now at a 10year high, with the non-oil deficit at a record level and rising steadily. Pumping up domestic demand with fiscal easing and picking fights with trading partners does that,'' said economist Ian Shepherdson of Pantheon Macroeconomics.

Oil producers have been hit by a 30-percent plunge in crude prices since October as supply surges just as the demand outlook weakens amid a global economic slowdown.

Oil output from the world’s biggest producers - OPEC, Russia and the United States - has increased by 3.3 million bpd since the end of 2017, to 56.38 million bpd, meeting almost 60 percent of global consumption.

That increase alone is equivalent to the output of major OPEC producer the United Arab Emirates.

The surge is largely down to soaring U.S. crude oil production, which has jumped by 2.5 million bpd since early 2016 to a record 11.7 million bpd, making the United States the world’s biggest oil producer.