US Trade Deficit Reaches 9 Year High

The U.S. trade deficit widened more than expected in December, hitting its highest level since 2008 as robust domestic demand pushed imports to a record high.

The Commerce Department said on Tuesday the trade gap increased 5.3 percent to $53.1 billion. That was the highest level since October 2008 and followed a slightly upwardly revised $50.4 billion shortfall in November.

Economists polled by Reuters had forecast the trade deficit rising to $52.0 billion in December after a previously reported $50.5 billion in the prior month. Part of the rise in the trade gap in December reflected commodity price increases.



The deficit surged 12.1 percent to $566.0 billion in 2017, the highest since 2008. The politically sensitive U.S.-China trade deficit increased 8.1 percent to a record $375.2 billion last year.

U.S. President Donald Trump has vowed to shrink the trade gap through his “America First” trade policies, which aim to shut out more unfairly traded imports and renegotiate past U.S. free trade agreements.


usdcad Canadian dollar graph, February 6, 2018

Trump has repeatedly threatened to terminate the North American Free Trade Agreement unless the pact linking Canada, Mexico and the United States can be changed to terms more favorable to Washington. And his administration has launched an investigation into China’s intellectual property practices that could lead to major new trade sanctions on Beijing.

The surge in the December trade deficit was flagged by an advanced goods trade deficit report published in late January. When adjusted for inflation, the trade deficit increased to $68.4 billion from $66.5 billion in November.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza