US trade deficit in August rises 3 per cent to $40.7 billion

The deficit with China increased 3.5 per cent to $33.9 billion, the highest level since September 2015. So far this year, America’s deficit with China, the largest with any single country, is running 5.7 per cent below last year’s level.

Republican presidential nominee Donald Trump has accused China of engaging in unfair trade practices which he says have cost millions of American jobs. He has threatened to impose punitive tariffs on Chinese imports to force them to reform their policies.

The trade deficit is the difference between what America exports for sale abroad and imports for consumption in the United States. So far this year, the deficit is running 1.3 per cent lower than the same period last year. The deficit in goods and services totalled $500.4 billion, trimming 0.6 percentage point from overall growth of 2.6 per cent in 2015.

Growth this year is expected to be even slower given a weak start which has seen the economy barely expanding at an anemic rate of 1 per cent in the first half of the year.

However, analysts believe growth will rebound in the second half as continued solid gains in employment help to boost consumer spending. They are looking for a declining trade deficit to support growth in the current quarter.

Trump has said he would exit from the North American Free Trade Agreement with Canada and Mexico if it is not improved and will kill the pending Trans-Pacific Partnership trade agreement between America and 11 Pacific Rim nations.

Both Trump and Democratic nominee Hillary Clinton have attacked the TPP agreement which the Obama administration negotiated and the president still hopes to get through Congress in a lame duck session after the November election.

Martin Crutsinger, The Associated Press

by Canadian Press

US trade deficit in August rises 3 per cent to $40.7 billion

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