The US monthly trade deficit hit its highest level since 2008 in July as the country continued to import more than it exports, in a blow to Donald Trump’s promise during the 2016 election campaign to reduce that figure.
The US’s trade deficit in goods and services grew 18.9 per cent month-on-month to $63.6bn, its highest since July 2008, according to US government data. The country’s goods deficit of $80.9bn, was the highest on record.
US international trade overall increased. Exports grew more than 8 per cent while imports rose 10.9 per cent, in a sign that global economies are beginning to recover from the coronavirus pandemic.
Total trade activity remains below pre-coronavirus levels, however, with Oxford Economics forecasting a record-breaking 14 per cent fall in trade activity over 2020.
In 2016 Mr Trump made reducing the US’s trade deficit — which represents the gap between imports and exports — a key election pledge, in an effort to bring manufacturing jobs back to the US from places like China and Mexico. In office, he has set about renegotiating the country’s trading relationship with allies such as Canada, Mexico and the European Union, as well as engaging in an turbulent trade battle with China.
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July’s figures show the US’s trade deficit with Mexico was at a record monthly high, with the US importing $10.6bn more in goods than it exported. However, through the second quarter of 2020, the deficit for goods and services combined decreased by $13bn to $15bn.
The new figures also show an increasing trade deficit with China, despite Mr Trump’s vows to reduce that figure.
During the second quarter of 2020, US government figures showed the deficit with China increased $21.4bn to $75.8bn.
Mr Trump campaigned in 2016 on getting much tougher on trade with China, and earlier this year struck a limited trade deal with Beijing after a bruising trade war between the two countries.
But his actions appear to have had little effect. The US trade deficit in goods with China was $347bn in 2016. By 2019, that was only marginally lower at $345bn.
Despite recently taking aim at China over everything from its responsibility for coronavirus to its human rights abuses against Uighurs in Xinjiang, however, Mr Trump has remained quieter on trade so far during his 2020 re-election campaign.
Behind China — with whom the US had the largest trade deficit over the second quarter — the US recorded a $24.8bn deficit with the EU over the same period, $12bn of which was with Germany.
US exports were mainly powered by goods, as travel restrictions continue to make services exports difficult. Cars were both the top item exported by the US, with a $2.1bn surge in exports, and the top imported item, with $3.7bn worth of passenger vehicles entering the country. Car parts were the second top imported item, worth $2.5bn.