Canada December trade deficit jumps as imports hit record high
- Author: Megan Austin Feb 07, 2018,
Feb 07, 2018, 1:12
Imports increased 2.5 percent in December to a record $256.5 billion, while exports edged up 1.8 percent to $203.4 billion, also a new record.
Government data released Tuesday showed the trade deficit increased due to record imports, which is partly a sign of a healthy economy, as well as rising oil prices.
Trump has repeatedly threatened to terminate the North American Free Trade Agreement unless the pact linking Canada, Mexico and the United States can be changed to terms more favorable to Washington.
Trade deficit in the US widened in the month of December, coming in above expectations.
The trade gap also suggests that a 3% annual economic growth might be hard to achieve, since the Imports, which subtract from gross domestic product, could get a further boost from a $1.5 trillion tax cut package that became effective in January.
The total USA foreign trade deficit increased by 5.3% month-on-month in December to reach $53.1bn, according to the Department of Commerce. The deficit in goods with China jumped 8.1 percent hit a record $375 billion.
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The surge in the December trade deficit was flagged by an advanced goods trade deficit report published in late January.
In 2017, the United States trade deficit jumped by 12.1% to a nine-year high of 566 billion Dollars.
Trade deficits are caused when a country's imports exceed its exports.
Imports from Mexico also hit a new record high. Imports from China and Mexico hit record highs The year 2017 saw the USA importing more foreign-made cars, computers, cell phones and other consumer goods, much of which were produced in China.
"We have made the point that when an economy is at full employment, an acceleration in demand tends to be accompanied by a pickup in import growth and a wider trade deficit", the note said. Total imports rose 2.5 percent sequentially, driven by consumer goods and automotive.
"Right now, the same trade policy that Trump attacked ferociously and promised to speedily replace is still in place", said Lori Wallach, director and founder of Public Citizen's Global Trade Watch.