U.S. trade deficit jumps to 10-year high in 2018

The U.S. trade deficit last year has surged to the highest level since 2008, according to a report by U.S. Commerce Department Wednesday.

Fresh data shows that the U.S. December trade deficit stood at 59.8 billion U.S. dollars, contributing to its whole-year trade deficit of 621 billion U.S. dollars.

The country’s trade gap with China, Mexico and the European Union also widened sharply, the report showed. The goods trade deficit with China increased 11.6 percent to an all-time high of 419.2 billion U.S. dollars in 2018.

The trade deficit has deteriorated despite the White House’s protectionist trade policy, which President Donald Trump said is needed to shield U.S. manufacturers from what he says is unfair foreign competition.

The release of the December report was delayed by a 35-day partial shutdown of the government that ended on January 25.

When adjusted for inflation, the goods trade deficit surged 10.0 billion U.S. dollars to a record 91.6 billion U.S. dollars in December. The jump in the so-called real goods trade deficit suggests that trade was probably a bigger drag on fourth-quarter gross domestic product than initially estimated by the government.The government reported last week that trade subtracted 0.22 percentage point from GDP growth in the fourth quarter. The economy grew at a 2.6 percent annualized rate in the October-December quarter, slowing from the third quarter’s brisk 3.4 percent pace.

The downbeat trade data joined weak December retail sales, construction spending, housing starts and business spending on equipment reports in setting the economy on a low growth trajectory in the first quarter.

The trade deficit in December was driven by 1.9 percent drop in exports of goods and services to a 10-month low of 205.1 billion U.S. dollars. Exports are weakening because of slowing global demand and a strong dollar, which is making U.S.-made goods less competitive on the international market.

Exports of industrial supplies and materials fell by 2.1 billion U.S. dollars, with shipments of petroleum products dropping 0.9 billion U.S. dollars and crude oil decreasing 0.5 billion U.S. dollars. Exports of capital goods dropped 1.7 billion U.S. dollars, led by a 1.0 billion U.S. dollars decline in civilian aircraft shipments.

In December, imports of goods and services increased 2.1 percent to 264.9 billion U.S. dollars. Consumer goods imports jumped 2.4 billion U.S. dollars, boosted by a 0.7 billion U.S. dollars increase in imports of household and kitchen appliances.

Cellphone imports increased 0.6 billion U.S. dollars. Capital goods imports increased 2.7 billion U.S. dollars, with imports of computer accessories rising 0.7 billion U.S. dollars. Computer imports also increased 0.7 billion U.S. dollars.