The trade deficit is a serious issue and governments around the world are working hard to cope with this problem. Importantly, the U.S. trade deficit rose in August and to reach the highest level in 14 years.
According to the Commerce Department, the gap between the goods and services the country sells and what it buys abroad rose 5.9% in August to $67.1 billion. People should take into account that, the U.S. trade deficit reached the highest level since August 2006.
Interestingly, exports rose 2.2% to $171.9 billion on a surge in shipments of soybeans. However, imports rose even more, as imports increased by 3.2% to $239 billion, led by purchases of crude oil, cars, and auto parts.
It is worth noting that, the U.S. deficit with other countries in the trade of goods such as airplanes and appliances reached a historic result in August, as it reached $83.9 billion. As a reminder, the U.S. ran a surplus of $16.8 billion in the trade of services such as banking and education, the lowest since January 2012.
Let’s have a look at the politically sensitive deficit which China. Interestingly, the deficit in the trade of goods with China fell 6.7% to $26.4 billion. So far in 2020, the country recorded the gap of $421.8 billion. Interestingly, compared to the period of time between January-August 2019, this number rose 5.7%.
The coronavirus pandemic as well as its impact on the world economy. Unfortunately, companies are struggling to adapt to the new reality. Moreover, the pandemic continues to dominate the headlines for more than seven months.
Let’s get back to the main topic. Total U.S. trade, exports plus imports fell 15.1% so far this year to $3.2 trillion.
Trade deficit and Donald Trump
It is worth noting that, President Donald Trump campaigned on a pledge to bring down America’s persistent trade deficits. As a reminder, he imposed taxes on imports of steel, aluminum as well as most products from China.
This is not the end of the story, as Trump negotiated a North American trade pact, as he wanted to encourage companies to boost production in the country.
However, the trade deficit won’t yield easily to changes in trade policy. People should take into account that, the U.S. recovers from springtime shutdowns. However, Americans are buying more imported while foreign demand for U.S. products remains week.
Interestingly, the U.S. Trade Representative Robert Lighthizer issued a statement regarding the monthly trade deficit report. According to Lighthizer, the U.S. deficit in the trade of goods fell 2.4% so far this year. Moreover, he mentioned a surge in gold imports by investors as its impact on the trade deficit. Furthermore, Lighthizer also noted that the deficit increased in August because America’s economy recovered more quickly than the economies of its trade partners.
The U.S. has the largest economy in the world, but as can be seen from the information stated above, there are challenges as well. The government should work with companies to improve the situation as soon as possible.
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