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U.S. Trade Deficit Hits Four-Year High

The United States’ international trade deficit increased last year to $502.3 billion – the largest gap between imports and exports since 2012. The U.S. Census Bureau reported recently that the deficit rose $1.9 billion, or 0.4%, in 2016.

Last year, exports dropped 2.3% to nearly $52 billion, while imports also declined about 1.8% to $49.9 billion. Economists said that a languid global economy and an increasingly robust American dollar impacted American trade in 2016 – tremors that could continue this year.

“Despite the recent pickup in export growth, we expect the real trade deficit to widen a bit in 2017 as the U.S. dollar appreciates further, global growth remains tepid and healthy domestic demand continues to pull in imports,” Sam Bullard, chief economist and managing director at Wells Fargo Securities, wrote in a research note published by U.S News.

President Donald Trump has vowed to improve America’s trade deficit, but analysts opine that policies he might enact could aggravate the situation if they negatively affect key trade partners, such as China, which may take retaliatory actions that hurt American exports.

“Investor attention will remain firmly on comments out of Washington, D.C., that have to do with future U.S. trade policy,” Bullard said. “Depending on what is proposed, the possible negative implications of future trade tariffs, renegotiation of NAFTA, etc., could undermine the positive benefits expected from tax policy changes and regulatory relaxation.”