The U.S. trade deficit surged to a 10-year high in 2018, belying President Donald Trump’s efforts to close the gap through protectionist trade policies.
The Commerce Department reported Wednesday that the deficit rose 12.5% last year to $621 billion, the highest level since 2018.
Counting only goods and excluding services, the trade gap hit an all-time record of $891 billion as Americans continued to spend freely on imports, reflecting the strong U.S. economy and the stimulus of Trump’s $1.5 billion tax cut.
The trade gap widened in a year when Trump imposed tariffs on steel, aluminum, washing machines, solar panels and a variety of Chinese goods. Despite the president’s trade war with China, the deficit in goods between the United States and China increased 11.6% to a record $419 billion in 2018.
The December trade deficit of $59.8 billion was the largest since October 2008, with exports to China declining by nearly 50% as U.S. companies were hurt by the retaliatory tariffs that Beijing has leveled on American goods. Economists had expected a shortfall of $57.9 billion in December.
“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,” BBC News noted. “But the opposite has happened.”
Trump’s own tax policies have boosted U.S. consumption while a rising dollar has made U.S. exports more expensive and less competitive, the BBC added.
In 2018, U.S. exports rose 6.3% to $2,500.0 billion while imports increased 7.5% to $3,121.0 billion. The deficit in December was driven by a 1.9% drop in exports of goods and services to a 10-month low of $205.1 billion.
“Remarkably, the trade deficit has kept going up even though the impact of oil imports has gone down,” MarketWatch said.
The publication noted that oil imports in 2018 accounted for a meager 6.1% of the deficit, the lowest share in several decades, compared with 47% in 2008. The shale-oil boom has made America one of the largest petroleum producers in the world again.