The monthly negative balance
between American exports and imports surged to multi-year highs in February.
The trade gap rose 1.6 percent to $57.6 billion, the US Commerce Department
reported on Thursday.
It is America's highest monthly
trade deficit since 2008, attributed partly to surging commodities prices.
President Donald Trump’s administration has been seeking to eliminate the gap,
saying that the United States is being taken advantage of by its trading
partners. Imports from China dropped 14.7 percent in February.
However, Trump’s tariffs are
unlikely to change the situation, experts say. “The US continues to
expand faster than most other industrialized countries, so it should not
surprise anyone that the trade deficit is worsening,” said Joel
Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania,
as quoted by Reuters. “Tariffs may sound like a good way to change the
pattern of trade, but they tend to raise prices rather than modify the trade
fundamentals.”
Some experts say the US trade
deficit will only grow, as the economy doesn’t supply enough for the ever-growing
demand. “We suspect widening trade deficits and resulting subtractions
from GDP growth will be a persistent feature of GDP this year as domestic
demand outpaces the economy’s supply potential,” John Ryding, chief
economist at RDQ Economics in New York, told Reuters. “Tariffs will do
nothing to lessen this trade imbalance, unless there is a retaliatory
escalation that leads to an economic downturn.”
The United States has been running
consistent trade deficits since 1976 due to growing imports of oil and consumer
products. Last year, the biggest trade deficits were seen with China, Mexico,
Japan, Germany, Vietnam, Ireland and Italy.
Growing trade deficits can be
biting for the US economy in two ways. First, it means the US economy is fueled
by skyrocketing debt, and sooner or later countries sponsoring America could
ask for the debt to be repaid. Second, when buying instead of producing,
American companies are losing expertise, and the US economy is losing
competitiveness as a producer of goods.
Source: RT