On Tuesday, U.S. Commerce Department has reported the monthly trade deficit for December 2017, which is the largest since the recession. According to the Commerce Department, the foreign-trade gap in goods and services increased 5.3% from the prior month to a seasonally adjusted $53.1 billion in December, the highest level since October 2008.
The imports rose 2.5% in December to a record $256.5 billion, driven by the higher imports of customer goods such as cellphones, vehicles and capital goods. Meanwhile, the exports went up 1.8% to $203.4 billion with the products like chemical grew, as well as capital goods like civilian aircraft.
The deficit surged 12.1% to $566 billion in 2017, the highest since 2008, which represented 2.9% of GDP, up from 2.7% in 2016.
The U.S. economy has run trade deficits for decades, during both economic expansions and recessions. Even though Trump administration has made the goal to narrow the trade gap through his “America First” trade policies, it is really hard to achieve when the domestic economy is expanding and the customers’ appetite for foreign-made products is strong.
Trade deficit in goods with China, Mexico and Canada, which account for more than half of total U.S. goods imports and exports, all widened in 2017, compared with the prior year, said the Commerce Department.
The trade gap also suggests that a 3% annual economic growth might be difficult to achieve, since the Imports, which subtract from gross domestic product, could get a further boost from a $1.5 trillion tax cut package that became effective in January.