REUTERS: U.S. Trade Deficit Rises to Nine-Year High on Robust Imports




February 6, 2018 | – 

WASHINGTON (Reuters) – The U.S. trade deficit widened more than expected in December to its highest level since 2008, as robust domestic demand pushed imports to a record high, potentially putting pressure on the Trump administration as it renegotiates trade deals.

The import-driven surge in the trade gap reported by the Commerce Department on Tuesday also suggests a 3 percent annual economic growth may be hard to achieve. 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.

The fiscal stimulus comes when the economy is almost at full employment, which means the resulting increase in demand will likely be satisfied with imports.

“When an economy is at full employment, an acceleration in demand tends to be accompanied by a pickup in import growth and a wider trade deficit,” said John Ryding, chief economist at RDQ Economics in New York.

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