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US trade deficit up

Friday, March 09, 2018

WASHINGTON - The US trade deficit increased to a more than nine-year high in January, with the shortfall with China widening sharply, suggesting that President Donald Trump's "America First" trade policies aimed at eradicating the deficit will likely fail.

The trade gap continues to widen a year into the Trump presidency.

Mr Trump, who claims that the United States is being taken advantage of by its trading partners, has imposed tariffs on imports of some goods and threatened punitive measures on others to shield domestic industries from competition.

The protectionist measures have sparked fears of a trade war.

"Trump's economics team is trying to turn back the clock on trade, but we doubt they will succeed as they are interfering with the business decisions made by thousands of American companies over the years," said Chris Rupkey, chief economist at MUFG in New York.

"This is a trade war with ourselves."

The United States has been running trade deficits for decades, with the trend worsening over the past 30 years as companies shifted manufacturing to countries such as China.

The Commerce Department said on Wednesday the trade deficit jumped 5.0 per cent to $US56.6 billion ($F115b).

That was the highest level since October 2008 and exceeded economists' expectations of an increase to $US55.1b ($F112b).

Part of the rise in the trade gap in January reflected higher commodity prices.

The politically sensitive goods trade deficit with China surged 16.7 per cent to $US36.0b ($F73b), the highest since September 2015.

The deficit with Canada soared 65 per cent to a three-year high of $US3.6b ($F7b).

China and Canada are the United States' top trading partners.

Mr Trump in late January imposed broad tariffs on imported solar panels and large washing machines.

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