Trade deficit jumps 5% to $56.6 billion as Trump readies steel tariff
via Jeffry Bartash
The numbers: The U.S. trade deficit climbed 5% in January and hit a nearly 10-year high, continuing a steady rise since President Trump took over that could exacerbate already tense disputes between the administration and key trading partners.
The U.S. trade deficit rose to $56.6 billion in January from $53.9 billion in December, the Commerce Department said Wednesday.
Economists polled by MarketWatch had forecast a $55.2 billion gap.
What happened: The deficit in January was 16% higher compared with the same month in 2017, when President Trump took office.
Exports fell 1.3%, largely reflecting a big drop in the volatile category of commercial aircraft shipments. Exports of oil, chemicals and other industrial supplies also declined.
Imports were unchanged at $257.5 billion. The biggest increase in petroleum imports in three years was offset by declines in cellphones, computer chips and other consumer-related goods. Those imports typically fall after the Christmas holiday-shopping season.
U.S. steel imports and exports, the epicenter of a new trade spat between the White House and the rest of the world, were little changed.
Big picture: The high U.S. trade deficit is a big sticking point for President Trump, who’s vowed to bring it down sharply. Yet in his first year in office the trade gap actually climbed to a nine-year high of $566 billion, showing just how difficult the problem is.
Americans buy more imports in part because the U.S. economy is stronger than it is in other parts of the world. The highest oil prices in three years is another source of the recent upward trend.
Trump is set to impose stiff tariffs on all foreign steel as part of a wider effort to achieve his goal, but his surprise decision has triggered a backlash from key trading partners such as Canada and Europe, fellow Republicans in Congress and every major business group except for the steel industry.
The risk of a broader trade fight is making investors nervous despite the healthiest U.S. economy in years. A protracted dispute could even undo some of the benefits to the U.S. from the recent corporate tax cuts that anchor the Trump White House’s economic agenda.
Market reaction: The Dow Jones Industrial Average DJIA, -0.84% and the S&P 500 index SPX, -0.58% fell again in Wednesday trades, reflecting Wall Street anxiety over Trump’s trade strategy and the departure of top economic aide Gary Cohn.
What they are saying?: “The increase in the trade deficit to a nine-year high … suggests that net trade will once again be a drag on economic growth in the first quarter, and will only add fuel President Donald Trump’s protectionist rhetoric in recent weeks,” said senior U.S. economist Michael Pearce of Capital Economics.