WASHINGTON: The US trade deficit in November rose to the highest level in nine months as imports of oil and other foreign goods increased, while American exports fell for a second month.
The trade deficit jumped 6.8 per cent to $45.2 billion, the largest imbalance since February, the Commerce Department reported Friday. Exports edged down 0.2 per cent to $122.4 billion, reflecting lower overseas sales of American-made airplanes, autos and farm products.
Imports rose 1.1 per cent to $231.1 billion, led by a 7.6 per cent jump in oil. President-elect Donald Trump made America’s large trade deficits a central part of his campaign. He promised to impose high tariffs on countries such as China and Mexico unless they reformed what Trump charged were unfair trading practices that have cost millions of American jobs.
A lower deficit adds to the overall economy because it means American companies are selling more to foreign countries than Americans are purchases from abroad. The deficit is the difference between exports and imports.
In November, imports rose to the highest level since June 2015, and economists predicted further increases as the US economy picks up momentum.
Sal Guatieri, senior economist at BMO Capital Markets, said the drop in exports in November was not surprising given that the value of the dollar has risen to a 14-year high against other currencies. A stronger dollar makes America products more expensive on foreign markets. Guatieri predicted the trade deficit would be a drag on growth going forward.
Trade will weigh on economic growth this year but other sectors will more than pick up the slack,” he said in a research note.
For November, America’s deficit with China narrowed slightly to $30.5 billion. For the first 11 months of 2016, the deficit with China totaled $319.3 billion, 5.9 per cent lower than the same period in 2015 but still the largest imbalance with any single country. The deficit with Mexico dropped 6.5 per cent in November to $5.8 billion and totaled $58.8 billion through the first 11 months of 2016, up 4.9 per cent from 2015. The overall deficit through November is running 1.1 per cent below the pace in 2015 when the deficit in goods and services trade totaled $500.4 billion.
Trump has threatened to slap tariffs as high as 45 per cent on China and Mexico unless those countries stop practices Trump believes have cost American jobs. To carry out his campaign pledges, Trump is assembling a trade team that represents a from traditional Republican free-trade policies.
This week he announced he would nominate Robert Lighthizer, a former trade official under President Ronald Reagan, to be US trade representative, the government chief’s trade negotiator. As a Washington lawyer representing US steel companies, Lighthizer has been a vocal proponent of imposing tariffs on steel imports.