Trade gap widens again
August deficit hits $53.2B as U.S. imports rise to a record $262.7B.
WASHINGTON — Record imports drove the U.S. trade deficit up for the thirdstraight month in August. The deficit in the trade of goods with China and Mexico hit records.
The Commerce Department said Friday that the trade gap — the difference between what America sells and what it buys abroad — rose to $53.2 billion in August from $50 billion in July. The August reading was the highest since February.
The median estimate of economists surveyed by Bloomberg called for a trade deficit of $53.6 billion. Preliminary figures last week had showed a wider trade gap in merchandise.
Imports rose 0.6 percent to a record $262.7 billion on higher shipments of cellphones and autos; exports slid 0.8 percent to $209.4 billion.
The U.S. ran a $76.7 billion deficit in the trade of goods such as machinery and cars. That gap was offset by a $23.5 billion surplus in the trade of services such as banking and tourism.
President Donald Trump campaigned on a pledge to bring down U.S. trade deficits and has added taxes on imported steel, aluminum and on many Chinese products, drawing retaliatory tariffs from U.S. trading partners.
Soybean exports dropped $1 billion, or 28 percent, to $2.58 billion, reversing a runup earlier this year ahead of the retaliatory levies from China.
Trump’s sanctions have yet to have an effect on the deficit, which is up 8.6 percent this year to $391.1 billion. The goods deficit with China rose 4.7 percent in August to a record $38.6 billion.
Trump sees the lopsided trade numbers as a sign of U.S. economic weakness and
as the result of bad trade deals and abusive practices by U.S. trading partners, especially China.
In addition to imposing import taxes, Trump has pulled the United States out of an Asia-Pacific trade deal negotiated by President Barack Obama’s administration and forced a rewrite of the North American Free Trade Agreement with Canada and Mexico.
Trump may hold talks with his Chinese counterpart Xi Jinping at a meeting of the Group of 20 nations at the end of next month with work toward a resolution of the escalating trade dispute on the agenda, a senior White House adviser said Friday.
“Better to talk than not talk, but the talks have to be serious,” Larry Kudlow, director of the White House National Economic Council, told Bloomberg Television on Friday. G-20 leaders will meet in Buenos Aires, Argentina, from Nov. 30 to Dec. 1.
Trump “believes that whole trading relationship is broken, and we have been negotiating on it on and off. It has been unsatisfactory thus far,” Kudlow said, underscoring that no meeting had been confirmed.
Mainstream economists view trade deficits as the result of an economic reality unlikely to bend to changes in trade policy: Americans consume more than they produce, and imports fill the gap. The strong U.S. economy also encourages Americans to buy more foreign products.
U.S. exports also are hurt by the American dollar’s role as the world’s currency. The dollar is usually in high demand because it is used in so many global transactions. That means the dollar is persistently strong, raising prices of U.S. products and putting American companies at a disadvantage in foreign markets.