US trade deficit hits 14-year high, rises to $67.1 billion in August

The US trade deficit rose in August to the highest level in 14 years.

The Commerce Department reported Tuesday that the gap between the goods and services the United States sells and what it buys abroad climbed 5.9 per cent in August to USD 67.1 billion, highest since August 2006.

Exports rose 2.2 per cent to USD 171.9 billion on a surge in shipments of soybeans, but imports rose more up 3.2 per cent to USD 239 billion led by purchases of crude oil, cars and auto parts.

The US deficit with the rest of the world in the trade of goods such as airplanes and appliances set a record USD 83.9 billion in August.

The United States ran a surplus of USD 16.8 billion in the trade of services such as banking and education, lowest since January 2012.

The politically sensitive deficit in the trade of goods with China fell 6.7 per cent to UD 26.4 billion.

So far this year, the United States has recorded a trade gap of USD 421.8 billion, up 5.7 per cent from January-August 2019.

Hammered by the coronavirus and its fallout on the world economy, total US trade -- exports plus imports -- is down 15.1 per cent so far this year to USD 3.2 trillion. Overall, trade flows remain subdued and the outlook is uncertain given a muted global growth and demand backdrop," said Rubeela Farooqi, chief US economist at High Frequency Economics.

President Donald Trump campaigned on a pledge to bring down America's persistent trade deficits.

He imposed taxes on imports of steel, aluminum and most products from China, among other things; and renegotiated a North American trade pact in an effort to encourage more production in the United States.

But the trade deficit won't yield easily to changes in trade policy.

As the US economy recovers from springtime shutdowns, Americans are buying more imported goods while foreign demand for US products remains weak.

In an unusual move, US Trade Representative Robert Lighthizer issued a statement on the monthly trade deficit report Tuesday, defending the president's record.

Lighthizer noted that the US deficit in the trade of goods is down 24 per cent so far this year and would have fallen more if it weren't for a surge in gold imports by investors using the precious metal to hedge against risks at a time of considerable uncertainty.

He also said: The trade deficit increased in August because America's economy has recovered more quickly than our trade partners.