The US trade deficit hit a record high of $80.9 billion in September, according to the Commerce Department report released Tuesday (October 20, 2017) and published by Financial Times. The figure is an increase from the previous month’s record of $75.4 billion and marks the second highest monthly deficit on record after August 2016 when it was at $90 billion. Economists had predicted that the trade gap would widen to around $70bn in September due to factors such as Hurricane Harvey which disrupted oil production and exports along with imports into Texas upswing due to reconstruction efforts following Hurricane Harvey.
The US goods and services deficit with China increased by $3.1 billion to a record high of $35.4 billion in September, which was the highest monthly deficit on record (data back to 2002). The 2016 trade gap with Mexico also hit a new record of $69.2 billion last month, up from $64.4 billion in August. The total deficit with Mexico of $79.4 billion marked the highest ever recorded. Donald Trump has consistently attacked US trade deficits as a major problem of America, particularly its dealings with China and Mexico, during his election campaigns and throughout his presidency so far.
The goods trade deficit increased $3.8 billion to $86.9 billion while the services surplus was up $0.3 billion to $21.7 billion in September, according to the Commerce Department report released Tuesday (October 20).
The total US trade deficit with the world rose to a 10-month high of $53.2 billion in August from $50.5 billion in July and is expected to have further increased in September because of the surge in imports. This is not good news for Donald Trump as he tries to divert global trade from emerging markets into America. The US president has already imposed tariffs on foreign steel and aluminum, China’s biggest exports to the US, as well as on Chinese goods worth $34 billion over alleged theft of American companies’ intellectual property. His administration is also expected to roll out further economic sanctions on China later this month.
Meanwhile, President Trump’s top economic advisor Gary Cohn resigned from his position after a disagreement over trade tariffs that the White House plans to impose. The departure of Mr Cohn comes just days after Mr Trump said that he would impose tariffs on steel and aluminium imports as early as next week.
His replacement, Mr Larry Kudlow, is said to be against imposing tariffs on imports. However, that does not seem to hold much water now as US Treasury Secretary Steven Mnuchin has also hinted at the fact that the US administration could impose trade restrictions on China over its intellectual property policies.
Mr Mnuchin said in an interview with CNBC that the White House is »not afraid of a trade war and that the Trump administration had urged China to stop its unfair practices. However, he also added that there were more than just tariffs as options on the table for US President Donald Trump.
The Chinese government has already imposed tariffs of 25% on $3 billion worth of US imports in retaliation to US tariffs on steel and aluminum.
Last Friday (October 13, 2017), the White House also issued a list of 10% tariff worth $200 billion which will come into effect after public consultation ends in December according to Mr Trump’s statement.