Light trails left by trucks run past containers sitting stacked at the Yangshan Deepwater Port, operated by Shanghai International Port Group Co. (SIPG), at night in this aerial photograph taken in Shanghai, China. (Photographer: Qilai Shen/Bloomberg)

The U.S. Trade Deficit With China Is Set to Balloon Again

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President Donald Trump underscored his desire to reduce the trade gap with China in his State of the Union speech Tuesday, yet the deficit is on track to balloon again this year as a solid economy boosts American demand for imports.

The total U.S. deficit in goods with China jumped by $37.6 billion, or 10.9 percent, in the first 11 months of 2018 compared with a year earlier, according to Commerce Department figures that were updated Wednesday with November data.

The U.S. Trade Deficit With China Is Set to Balloon Again

That brought the year-to-date U.S. trade gap with the world’s second-largest economy to $382.3 billion -- more than five times the next-largest deficit, with Mexico -- keeping the trend of widening intact despite the China gap narrowing by $5.2 billion in November on a monthly basis.

The report illustrates how the trade figures can be volatile from month to month, particularly with a tariff war between the U.S. and China affecting the timing and amount of shipments between the nations.

The China data were part of a shutdown-delayed report showing the overall U.S. trade deficit in goods and services narrowed in November to a five-month low. The smaller gap spurred some analysts to boost tracking estimates of fourth-quarter economic growth, with JPMorgan Chase & Co. raising its projection to a 2.6 percent annualized pace from 2.2 percent.

Trump has pointed to the imbalance of imports and exports with the Asian nation as a sign of how the U.S. is being taken advantage of. He’s vowed to close the gap, saying during his speech Tuesday that one of his goals in negotiating with President Xi Jinping is to “reduce our chronic trade deficit.” But many analysts disagree that the large deficit is a problem for the U.S. economy.

But the data show that despite tariffs on Chinese goods, U.S. consumers and companies keep buying items from the country, importing 7 percent more merchandise in the first 11 months of 2018 than the same period in 2017. The threat of future tariffs also had the effect of pushing companies to stockpile goods, which in some months inflated imports from China, which accounts for about one-fifth of total U.S. imports.

The deficit with China also widened in advanced technology products, which include aerospace, electronics and communications. U.S. imports of such items from China increased in the first 11 months of 2018 by about $6 billion to $160.1 billion, though they were down about $1 billion in November from October. Trump has cited allegations of China’s theft of American technology and information as a basis for confronting the country on trade.

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