Trade Deficit Last Year Hit Highest Level in Four Years

(CN) – The U.S. trade deficit rose slightly in 2016 to $503.6 billion — the highest level in four years. The numbers released by the Commerce Department Tuesday are sure to be seized by President Donald Trump to support his calls for a tougher approach to trade.

According to the department, the trade gap widened last year because exports fell faster than imports, a byproduct of weakness in the global economy and a surging dollar which made U.S. products more expensive for foreign consumers.

The last time the United States enjoyed a trade surplus was during the administration of former President Gerald Ford.

Trump has pledged to impose penalty tariffs on countries such as China and Mexico to force them to drop what he contends are unfair trade practices that have cost millions of American jobs.

The latest numbers show that the trade deficit with Mexico rose 4.2 percent to 63.2 billion in 2016 (a five-year high).

The news on the trade deficit with China — the largest among U.S. trading partners — was better; it actually declined in 2016 by 5.5 percent, but still came in at $347 billion.

Put another way, it still make up more than three-fifths of the total U.S. trade deficit.

The trade deficit actually narrowed by 3.2 percent in December on the strength of exports of commercial aircraft, heavy machinery and autos, which offset a rise in imports.

But that dip in the trade deficit was expected and is not seen as the harbinger of a trend.

In a research note issued this week, Sam Bullard, chief economist at Wells Fargo Securities, said “Despite the recent pickup in export growth, we expect the real trade deficit to widen a bit in 2017 as the U.S. dollar appreciates further, global growth remains tepid and health domestic demand continues to pull in imports.”

 

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