The U.S. trade deficit widened more than forecast in January to a post-recession high, adding to figures cited by President Donald Trump as evidence of American weakness.
The gap increased 5 percent to $56.6 billion, the biggest since October 2008, from a revised $53.9 billion in the previous month, Commerce Department data showed Wednesday. Exports fell 1.3 percent from December, the most in more than a year, while imports were little changed.
From a current economic standpoint, the widening deficit indicates trade may again be a drag on the pace of first-quarter expansion. The gap has increased in recent months as steady household spending and business investment boost imports. Improving global growth and a weaker dollar have been supporting overseas sales of American-made goods, though not enough to outpace inbound shipments.
From a political standpoint, however, the gap has formed a statistical backdrop first to Trump's 2016 election campaign and now to his talk of tariffs on steel and aluminum. The president has opened multiple fronts in trade battles, from targeting strategic rival China to angering allies like Canada and the European Union with threats to erect fresh barriers.
The EU said it is preparing retaliatory levies on products including motorcycles, jeans and bourbon whiskey if Trump follows through on his threat. A full-blown trade war would risk blunting the effects of the president's policies such as tax cuts and reduced regulation, aimed at boosting U.S. growth.
"The United States has been taken advantage of by other countries, both friendly and not so friendly, for many, many decades," Trump said Tuesday when asked if he would push forward with the tariffs despite concerns from fellow Republicans. In an apparent reference to the full-year trade gap in goods, Trump said, "we have a trade deficit of $800 billion a year. And that's not going to happen with me."
The median estimate of economists surveyed by Bloomberg called for a January trade deficit of $55 billion in goods and services.
Exports declined to $200.9 billion, led by civilian aircraft, oil and other industrial materials, according to the Commerce Department. At the same time, exports of consumer goods rose to a record $17.9 billion, while shipments of automotive vehicles and parts were the highest since July 2014.
Imports held at $257.5 billion, as petroleum imports rose to a three-year high while capital and consumer goods declined.
The report also showed that the merchandise trade gap with China, the world's second-biggest economy behind the U.S., widened in January to $36 billion, the highest since September 2015, on an unadjusted basis. The goods trade deficit with Canada hit a three-year high of $3.6 billion.
The trade figures provide a hint of how growth is shaping up in the first quarter, after trade was a substantial drag on the economy in the final three months of 2017. Net exports subtracted 1.13 percentage points from the annualized pace of gross domestic product growth in the fourth quarter, which came in at 2.5 percent.
Business on 03/08/2018
Print Headline: Trade deficit grows 5% to $56.6B, hits post-recession high