Industryweek 13156 Trade

Trade Deficit in US Widens to Largest in Almost Five Years

March 7, 2017
The wider deficit indicates trade, which subtracted 1.7% from fourth-quarter growth, will weigh on the economy in early 2017.

The U.S. chalked up its largest trade deficit since March 2012 as a jump in merchandise imports in January exceeded a smaller gain in shipments overseas.

The gap in goods and services trade increased by 9.6% to $48.5 billion, matching the median forecast in a Bloomberg survey, Commerce Department figures showed Tuesday. The deterioration in January from the previous month reflected a 2.3% gain in imports, the most since March 2015, and a 0.6% pickup in exports.

Rising imports of consumer goods, capital equipment and motor vehicles reflect steady demand from American households and companies, with help from a stronger dollar. The wider deficit indicates trade, which subtracted 1.7% from fourth-quarter growth, will weigh on the economy in early 2017.

Bloomberg survey estimates ranged from a trade deficit of $43 billion to $49.6 billion. The Commerce Department left the shortfall for December at the initially reported $44.3 billion.

Gap with China Widens

The data also showed the merchandise trade gap with China, the world’s second-biggest economy, widened to $31.3 billion in January from $27.8 billion on an unadjusted basis. However, the trade deficit with Mexico narrowed to $3.9 billion, the smallest since July 2015.

U.S. shortfalls with those countries are a focus of the Trump administration. President Donald Trump has said he wants to negotiate better terms with trading partners to trim the gap and boost economic growth.

The U.S. is seeking more “reciprocal” trade with other countries and trying to keep American production capacity out of foreign hands, White House trade adviser Peter Navarro said at an economists’ conference in Washington on Monday.

More Imports

The Commerce Department’s data showed imports increased to $240.6 billion in January, also the highest since December 2014, from $235.3 billion in the prior month. Imports of automobiles and parts climbed to a record, while petroleum products were the highest in two years. The value of imported capital equipment was the largest since April 2015.

Exports increased to $192.1 billion in January, the highest since December 2014. The value of petroleum shipments overseas and automobiles picked up.

The petroleum deficit was the biggest since July 2015.

After eliminating the influence of prices, which renders the numbers used to calculate gross domestic product, the trade deficit grew to $65.3 billion in January from $62 billion in the prior month.

Net exports in the fourth quarter subtracted the most from GDP since the second quarter of 2010, according to previously reported figures that showed the overall economy grew at a 1.9% pace.

By Shobhana Chandra

Popular Sponsored Recommendations

Gain a competitive edge with real-world lessons on private 5G networks

Nov. 16, 2023
The use of private networks in manufacturing applications is rapidly growing. In this paper, we present valuable insights and lessons learned from the field with the goal of enhancing...

Discover How an Eye Tracking Study Improves Training Procedures

Oct. 29, 2023
Did you know that your training processes can be streamlined by visualizing and analyzing key skills within your employee base? Find out how we use eye tracking to capture advanced...

The Ultimate Ecommerce Excellence Checklist

Oct. 2, 2023
Scaling ecommerce operations is no easy task when your business is moving fast. Assess your current ecommerce maturity level and set optimization priorities with this practical...

The Realist Guide to Sustainable Supply Chains

Sept. 28, 2023
A ‘roll up your sleeves’ guide to driving green line performance at your organization. Learn with this easy-to-understand ebook how to implement green supply chain management ...

Voice your opinion!

To join the conversation, and become an exclusive member of IndustryWeek, create an account today!