The US trade deficit swelled in January to its largest level in nearly a decade as oil prices rose and the world’s biggest economy sold fewer aircraft, government data showed today.
The news comes amid White House furore over trade policy, with President Donald Trump’s top economic advisor Gary Cohn announcing his resignation late Tuesday after losing a bruising internal battle over whether to impose punishing tariffs on steel and aluminium.
Cohn’s resignation and the fear Trump will press ahead with restraints on trade have roiled global markets in recent days. Wall Street opened lower this morning but major indices were struggling to turn positive toward 1600 GMT.
In the first month of the year, the US trade gap rose five per cent over an upward-revised December to $ 56.6 billion, its highest level since October of 2008, overshooting analyst expectations for only a two per cent increase, according to the Commerce Department. This put January up 16.2 per cent over January of 2017, with exports trailing imports.
The figures also put trade on track to subtract from GDP growth in the first quarter. They also follow official reporting last month showing Trump’s first year in office had the highest trade gap since the start of the global crisis in 2008.
With global investors rattled in the wake of Cohn’s departure, Trump Cabinet members appeared on television to make the president’s case. Commerce Secretary Wilbur Ross told CNBC the US was not “looking for a trade war.” “We’re going to have sensible relations with our allies,” he said.
Economic recovery
While economists say a growing trade deficit can be a sign of economic recovery, with strong consumer demand outstripping domestic supply, Trump has attributed them to “cheating” by US trade partners which he claims has hollowed out American industry.
Today’s Commerce Department figures showed January exports fell 1.3 per cent to $ 200.9 billion, the largest decrease in 16 months, as aircraft exports decreased in value by $ 1.8 billion and international sales of industrial supplies like crude oil and other chemicals fell by $ 1.3 billion.
Imports were unchanged at $ 257.5 billion, which is still five per cent over their level in January of 2017.