U.S. Trade Deficit Widened Again in January
By Ben Leubsdorf and Josh Mitchell
WASHINGTON--The foreign-trade deficit widened in January for the fifth straight month and hit its largest level in over nine years, as exports weakened in the first month of 2018.
The U.S. trade gap in goods and services expanded 5.0% from the prior month to a seasonally adjusted $56.60 billion in January, the Commerce Department said Wednesday. That was a fresh postrecession record; the monthly trade deficit was last larger in October 2008.
Economists surveyed by The Wall Street Journal had projected a January trade deficit of $55.0 billion.
Imports were unchanged from December, with a rise in petroleum imports offset by declines in other categories. Exports fell 1.3% in January, including reduced shipments of capital goods and industrial supplies.
Excluding services, the U.S. trade gap for goods in January was the largest since July 2008.
The monthly trade deficit in goods with China widened to its highest level since September 2015, and the U.S. goods deficit with Canada hit its highest level since the end of 2014. Those figures weren't adjusted for seasonality.
In general, data on international trade can be volatile from month to month, and the figures weren't adjusted for inflation.
The broader trend also shows a widening trade deficit. Compared with a year earlier, the trade gap in January widened 16.2% as imports climbed 7.4% and exports rose a more modest 5.1%.
President Donald Trump has long argued the U.S. should reduce its trade deficit, and last week announced plans to impose a 25% tariff on imported steel and a 10% tariff on imported aluminum to bolster domestic production of those metals.
He shrugged off concerns that other nations might retaliate with duties targeting U.S. exports, tweeting Friday that when a country "is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win."
Imports of steel and aluminum are relatively small compared with the overall U.S. economy, totaling about 0.2% of economic output, according to JP Morgan Chase economists Michael Feroli and Jesse Edgerton. That could mute the proposed tariffs' effects on inflation and the broader economy, they said last week in a note to clients, though they cautioned that "more risks would obviously arise if this action were to initiate retaliatory action."
The data in Wednesday's report predated Mr. Trump's announcement. In January, the dollar value of imported iron and steel mill products declined from the prior month, as did the value of imported bauxite and aluminum.
The U.S. economy has run overall trade deficits for decades, during both economic expansions and recessions, which economists say reflects the fact that Americans consume more than they produce relative to the rest of the world.
The U.S. exports more services than it imports, offsetting in part its larger trade deficit in goods.
Rising incomes and low unemployment have been supporting U.S. growth and domestic demand for imports. A weaker dollar and stronger growth overseas, meanwhile, have boosted foreign demand for U.S.-made products.
"Economic activity abroad ... has been solid in recent quarters, and the associated strengthening in the demand for U.S. exports has provided considerable support to our manufacturing industry," Federal Reserve Chairman Jerome Powell said last week during testimony before Congress.
The Commerce Department's latest report on foreign trade in goods and services can be accessed at: https://www.census.gov/foreign-trade/Press-Release/current_press_release/ft900.pdf
Write to Ben Leubsdorf at firstname.lastname@example.org and Josh Mitchell at email@example.com
(END) Dow Jones Newswires
March 07, 2018 08:45 ET (13:45 GMT)Copyright (c) 2018 Dow Jones & Company, Inc.