United States trade deficit hits ten-year high

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Of course, foreign exporters can only flood the USA with imports if US consumers are willing to buy them. Beijing's longstanding policy of subsidizing its own businesses and charges that it illicitly obtains USA technology remain key obstacles.

The skyrocketing United States trade deficit hit the highest level in a decade a year ago despite President Donald Trump's global trade offensive, according to a government report Wednesday.

The US is now locked in a trade battle with China over what it claims are unfair trade practices, resulting in tit-for-tat tariff increases on each others' goods. The official insisted on anonymity to discuss private conversations.

Trump also halted talks on the Transatlantic Trade and Investment Partnership (TTIP), which had been negotiated between the European Union and the United States since 2013 during the Obama administration.

Thomas Duesterberg, a senior fellow at the Hudson Institute, says in the long run that means continuing to sell American technology to China.

Today, the USA economy is healthy, with economic growth relatively robust.

Chalk up that risk - higher borrowing costs - as something that might work to cap gains in US stocks. He put $250 billion in tariffs on Chinese goods last September in an attempt to alter the balance of trade with China and increase leverage over the world's second-largest economy at the negotiating table. The idea was that the tariffs would make imports more expensive, thereby discouraging Americans from buying foreign goods and services and shrinking the trade deficit. It followed in September with 10 percent duties on an additional $200 billion.

Some of this is likely due to the ongoing trade war between the USA and China.

"We find that the USA tariffs were nearly completely passed through into USA domestic prices, so that the entire incidence of the tariffs fell on domestic consumers and importers up to now, with no impact so far on the prices received by foreign exporters", according to the report. They also said American consumers continue to patronize imported smartphones, laptops and computer accessories, most of which are made in China. It is also $1.4 billion beneath Econoday's consensus range and $2.2 billion deeper than the consensus.

Global stocks rise on reports US, China close to trade deal
However, The New York Times reported that Trump said he would delay the deadline for increasing tariffs on Chinese imports. Bloomberg reported Friday that the USA and China were close to finalizing a trade deal.

The destructive and pointless absurdity of the Trump administration's aggressive trade policies showed up, quite predictably (to those outside the Trump administration) in a blow-out in the USA trade deficit in 2018. But there are also secondary effects.

"The chances of a deal with China this month look a bit weaker now, while more trade conflict with Europe seems increasingly likely", said Chris Beauchamp, chief market analyst at online trading firm IG.

The latest report revealed that the trade deficit with China in December was $38.7 billion, by far the highest of any nation.

As president, Trump's signature effort to stimulate USA growth - deficit-funded tax cuts - likely helped fuel the willingness of American corporations and households to spend, including on imported goods.

China's ceremonial legislature was poised this week to back a law that would discourage officials in the country from pressuring US companies to hand over technology. That, of course, is President Trump's aim.

But it's unclear whether China would actually enforce this commitment - a concern that could potentially prevent a meaningful trade agreement.

Any deal with China would mark a milestone in Trump's tariff war, though not its end. Yet Beijing would likely regard such a mechanism as infringing on its sovereignty.

There would either be "a good deal or it's not going to be a deal, but I think they're moving along very nicely". But it's also a victim of his trade policy failures. The result has been more imports than exports.

"The Chinese will never agree to compromise on this, because it is key to the country's future", Lam said. Tariffs lead to higher prices paid by consumers, so when the president and administration officials cite an influx of tariff-related funds to the US government, USA consumers are largely the ones footing the bill. It simply reflects the greater value of what the United States imports compared to what it exports.

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