Yearly Trade Gap Falls for First Time Since 2013

A container ship is unloaded at the Virginia International Gateway terminal in Norfolk, Va., on May 10, 2019. (AP Photo/Steve Helber, File)

(CN) – The overall U.S. trade deficit shrank in 2019 for the first time in six years as imports fell faster than exports, including crude oil imports.

The difference between the goods and services the United States sells and buys from other countries dropped 1.7% last year to $616.8 billion, the first decrease since 2013. The 2018 deficit of about $628 billion marked a 10-year high.

American exports fell 0.1% in 2019 to $2.5 trillion, but imports dropped even further, declining 0.4% to $3.1 trillion. Crude oil imports in particular sank 19.3% to $126.6 billion.

The closely watched goods deficit with China plunged by 17.6% to $345.6 billion last year, according to a Commerce Department report released Wednesday.

President Donald Trump has made closing the trade gap with China a top priority under his “America First” policy, imposing tariffs on $360 billion worth of imports from Beijing.

In January, the two countries signed the first phase of a trade agreement after more than a year of back and forth tariffs. Under the partial deal, China agreed to buy $200 billion more in U.S. goods over the next two years and the Trump administration abandoned an additional 15% tariff that was set to take effect last month.

In addition, Trump inked a new trade deal with Canada and Mexico last week to replace the North American Free Trade Agreement. The new USMCA is considered pro-labor and was backed by Democratic lawmakers after negotiations with the White House.

While the goods deficit with China fell last year, the gap with Mexico hit a record high of $101.8 billion, a 26.2% increase from the year before. The deficit with the European Union also reached an all-time high of $177.9 billion, a 5.5% surge.

Robert E. Scott, senior economist at the nonprofit think tank Economic Policy Institute, said the while the overall deficit fell, the U.S. trade gap in non-oil goods actually grew 1.8% last year.

“Aside from petroleum, trade was a net drag on the economy in 2019, and on manufacturing, in particular,” he wrote. “This comes on top of an 18.3% increase in the goods trade deficit in the first two years of the Trump administration.”

Looking only at December, the trade gap grew 11.9% from the month before to $48.9 billion. Exports for that month increased 0.8% to $209.6 billion as imports grew 2.7% to $258.5 billion.

While the Trump administration has projected yearly economic growth of 3% or higher, the  Commerce Department reported last week that the gross domestic product grew at the slowest rate since 2016 last year.

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