Despite more than two years of “America First” policy initiated by President Donald Trump, the Commerce Department reported Wednesday that U.S. goods and services deficit soared to $621.0 billion last year, up 12% from $552.3 billion in 2017.
This is the highest mark since the country posted $709 billion trade deficit in October 2008. Further, it reflects an excess of more than $100 billion from the deficit that President Trump took over from President Obama. It also means that the U.S. is 20% worse than it was when Trump rose to power in January 2017, based on his own benchmark.
The department said that international trade deficit in goods and services was pegged at a seasonally $59.3 billion in December, up 19% from the prior month. The deficit is slightly wider than the $57.3 billion than analysts surveyed by The Wall Street Journal had predicted. Exports fell for a third straight month in December as imports rebounded.
Trade deficit is an accounting measure that is sometimes used by economists to gauge whether a country is winning or losing international trade. Excluding services such as intellectual property, banking, and tourism that the country sells to foreigners, the deficit swelled 10% to a record $891.3 billion.
U.S. bought far more in foreign products compared to what it sold to countries in Asia, Europe, Africa, and Africa, topping the $838.3 billion record set in 2006 when housing bubble was peaking. Industrial supply imports such as crude oil and fuel, climbed 13% to $575.7 billion in 2018 while consumer goods imports rose 7.7% last year to $647.9 billion, driven in part by a 22% jump in inbound shipments of drugs.
The trade imbalance with China also hit a record $419 billion in 2018 with the Asian giant accounting for nearly 50% of the U.S. deficit in goods. U.S. trade gap has worsened despite the protectionist trade policies that Trump’s White House’s has insisted are needed in order to protect American businesses from what the President says is unfair global competition.
Last year, the U.S. imposed levies on $250 billion worth of products imported from China. Beijing retaliated with tariffs on $110 billion worth of American goods, including soybeans and auto parts. The leadership of both nations later agreed to halt additional tariffs in a deal that keeps their trade dispute from intensifying as they try to solve their disagreements with fresh discussions aimed at arriving at an agreement.
The Commerce Department delayed the report due to the 35-day partial federal government shutdown that ended on January 25.