MercoPress. South Atlantic News Agency

Trump frustrated: US trade deficit soars to a 10-year high

Reducing the gap is a key plank of president Donald Trump's policies. But in 2018, the US exported fewer goods compared with how much it bought.

The US trade gap with the rest of the world jumped to a 10-year high of US$ 621bn last year, dealing a blow to President Donald Trump's deficit reduction plan. The trade deficit is the difference between how much goods and services the US imports from other countries and how much it exports.

Reducing the gap is a key plank of Mr. Trump's policies. But in 2018, the US exported fewer goods compared with how much it bought.

Mr. Trump claims that the US is being “ripped off” by other nations and wants countries to lower their tariffs on US goods and buy more of them. However, official data shows that while exports of US goods and services rose by US$148.9bn last year, imports jumped by US$217.7bn. It means that the gap is the widest since 2008, when the global financial crisis hit and the US fell into recession.

The deficit in goods and services during December also hit a near 10-year high of US$59.8bn. Exports to the rest of the world fell 1.9% to US$ 205.1bn, while imports rose by 2.1% to US$ 264.9bn.

The US is currently locked in a trade battle with China over what it claims are unfair trade practices, resulting in tit-for-tat tariff increases on each others' goods. Both nations are in discussions and there is speculation they could reach an agreement by the end of March.

New data shows that the trade gap between the US and China widened last year by US$ 43.6bn to US$ 419.2bn as exports of American products and services fell, but imports from China rose.

Last year, Mr Trump introduced tariffs on steel and aluminum from around the globe and on a range of imports from China. The idea was that the tariffs would make imports more expensive, thereby discouraging Americans from buying foreign goods and services and shrinking the trade deficit.

But the opposite has happened. Donald Trump goes into the presidential re-election race having failed to deliver on his campaign promise to close the US trade deficit.

Part of the problem is Mr. Trump's own tax policies. They boosted US consumption and a lot of that spending went abroad. This happened as growth was slowing in other parts of the world, contributing to a rising dollar. That made US exports more expensive and less competitive.

The deficit between the US and the European Union also increased in 2018, up by US$ 17.9bn to US$ 169.3bn.