The U.S. trade deficit widened for the sixth consecutive month in February, increasing to a more than nine-year high, with both exports and imports rising to record levels, the government reported Thursday, suggesting trade will subtract from first-quarter gross domestic product (GDP) growth. The Commerce Department said the trade deficit rose 1.6 percent to $57.6 billion, the highest level since October 2008, though much of the increase was attributed to higher commodity prices. The deficit in goods was the highest since mid-2008, and the surplus on services was the lowest since late 2012. In February, exports of goods climbed 2.3 percent to $137.2 billion, supported by shipments of industrial materials as well as sales of motor vehicles and engines. There also were increases in exports of capital goods such as civilian aircraft and drilling and oilfield equipment. Goods imports increased 1.6 percent to $214.2 billion in February, lifted by imports of food, industrial materials, and capital goods. Imports of services rose to a record $47.8 billion, likely reflecting royalties and broadcast license fees related to the Winter Olympics. The politically sensitive trade deficit with China narrowed sharply in February, decreasing 18.6 percent to $29.3 billion. Imports from China dropped 14.7 percent, while exports were unchanged. However, the trade deficit with Mexico jumped 46.6 percent. News of the worsening trade deficit comes as the United States and China are imposing tariffs on each other's goods, rattling global financial markets. The Trump administration on Tuesday targeted 25 percent tariffs on 1,300 Chinese industrial technology, transport, and medical products, in an effort to force changes in Beijing's intellectual-property practices. China quickly retaliated Wednesday with a similar set of tariffs on U.S. agricultural, transportation, and chemical products. While protectionist policies may be popular with Trump's working-class political base, economists warn they will hurt economic growth and raise prices for both producers and consumers. Strong economic growth—which attracts imports—and the Trump administration's $1.5 trillion tax cuts will worsen the trade deficit, economists say.
