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WASHINGTON (Reuters) – The US trade deficit reached its highest level in five months in July, with China's politically sensitive gap reaching record levels, which could encourage the Trump administration to aggressively pursue its "America First" program. .
PHOTO: A truck transports a container to the Los Angeles Harbor in Los Angeles, California, USA, July 16, 2018. REUTERS / Mike Blake / File Photo
The protectionist trade policy of the administration has left the United States with high tariffs with the European Union, Canada and Mexico, as well as a growing trade war with China. President Donald Trump says his trading partners are taking advantage of the United States.
The deterioration in the trade deficit reported by the Commerce Department on Wednesday came a day before the end of a public comment period on a $ 200 billion list of Chinese goods whose tariffs are expected to be reached soon.
"America still does not get a fair deal on trade and that can only mean one thing," said Chris Rupkey, chief economist at MUFG in New York. "President Trump will unlock $ 200 billion in tariffs on Chinese imports."
The Commerce Department said the trade deficit rose 9.5 percent to $ 50.1 billion as soybean and civil aircraft exports fell and imports reached a record high. The business gap is now being dug for two consecutive months.
Economists polled by Reuters had forecast that the trade deficit would reach $ 50.3 billion in July.
At the beginning of the year, the government imposed import duties on goods, including steel, aluminum, washing machines and solar panels, to protect American industries from what Trump said was unfair foreign competition. In addition, the United States and China have imposed retaliatory duties on $ 100 billion of combined products since early July.
Washington is also seeking to reorganize the North American Free Trade Agreement. The United States reached an agreement with Mexico last week, but negotiations with Canada have been controversial.
The administration believes that the elimination of the trade deficit will put the economy on the path of rapid growth. But economists say some of the government's policies, such as $ 1.5 trillion in tax cuts earlier this year, will worsen the trade deficit. Fiscal stimulus spurred spending by consumers and businesses, attracting more imports.
"The US can not take advantage of a boom in capital spending without installing a significant amount of equipment and that means an increase in capital goods imports," said John Ryding, chief economist at RDQ Economics in New York.
The trade deficit narrowed in April and May, as soybean exports to China were outstripped by farmers before Beijing retaliatory tariffs came into effect in early July. The deterioration of the trade deficit in July was reported in a preliminary report released last month.
US stocks were trading because of fears Trump would soon increase the trade war with China. The dollar fell against a basket of currencies while US Treasury prices were mixed.
REGISTRATION OF HIGH IMPORTS
After adjusting for inflation, the trade deficit peaked at $ 82.5 billion in July, up from $ 79.3 billion in June. The so-called July trade deficit is above the second quarter average of $ 77.5 billion.
If this trend continues in August and September, trade may be shrinking from gross domestic product growth in the third quarter. Trade contributed 1.17 percentage points to the 4.2% annualized growth rate of the economy in the second quarter, almost double the 2.2% recorded for the January-March period.
The goods trade deficit with China jumped 10% to a record $ 36.8 billion in July. The trade gap with Mexico declined 25.3 percent to $ 5.5 billion, while the deficit with Canada jumped 57.6 percent to $ 3.1 billion. dollars.
The trade deficit with the European Union climbed 50% to a record $ 17.6 billion.
In July, exports of goods and services fell 1.0% to $ 211.1 billion. Soybean exports fell by $ 0.7 billion and shipments of civil aircraft decreased by $ 1.6 billion. However, oil exports were the highest ever recorded.
With the stronger dollar in recent months against the currencies of major US trading partners and the slowdown in global economic growth, exports may be lagging behind.
Imports of goods and services rose 0.9 percent to a record $ 261.2 billion in July. They were stimulated by imports of computers and computer accessories. The import bill was also inflated by oil imports, which were the highest since December 2014 in a context of rising oil prices.
The price of imported crude oil averaged $ 64.63 per barrel in July, the highest level since December 2014, up from $ 62.42 in June. Imports of automobiles and parts and other goods also increased. Imports of pharmaceutical preparations, however, decreased by $ 1.3 billion.
"In the longer term, the global slowdown and the strengthening of the dollar will temper export growth while imports will remain well supported by domestic demand, fiscal stimulus and the greenback," said Oren Klachkin, Senior Economist at Oxford Economics.
Reportage By Lucia Mutikani; Edited by Andrea Ricci
