The U.S. trade deficit widened in 2018 to a 10-year high of $621 billion, bucking President Donald Trump’s pledges to reduce it, as tax cuts boosted domestic demand for imports while the strong dollar and retaliatory tariffs weighed on exports
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As a share of the economy, the gap widened to 3 percent of GDP from 2.8 percent in 2017. It’s still significantly smaller than in the decade before the Great Recession, when it approached 6 percent.While Trump frequently cites the deficit as evidence of the failure of his predecessors’ trade policies -- even though most economists don’t dwell on the indicator -- the gap has increased by $119 billion during his two years as president.
For December, exports fell 1.9 percent from the prior month, the biggest decline since early 2016, to $205.1 billion, on lower shipments of civilian aircraft, petroleum products and corn. Imports rose 2.1 percent to $264.9 billion, boosted by foods, consumer goods, computers and aircraft. The goods deficit was a record.“The widening trade balance in December is a blow to U.S. trade policy.
But Trump’s trade policy also contributed materially to the growth of the gap in 2018. The tariffs he threatened and then imposed on Chinese imports caused a rush by importers to get ahead of the new duties that fueled an increase in incoming traffic at West Coast ports last year. The retaliatory tariffs Trump provoked from China also hit major U.S. agricultural exports such as soybeans: shipments of that item fell $4 billion last year.
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