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Report: U.S. trade deficit for goods reached record $891B in 2018

The U.S. trade gap with China accounts for nearly half of the overall deficit, the report says.

By Nicholas Sakelaris
Report: U.S. trade deficit for goods reached record $891B in 2018
President Donald Trump meets with Chinese Vice Premier Liu He (C) in the Oval Office of the White House on February 22 for a discussion on China-United States trade. Photo by Kevin Dietsch/UPI | License Photo

March 6 (UPI) -- The U.S. trade deficit ballooned in 2018 despite moves by the Trump administration over the past year to keep it down and renegotiate trade agreements.

The U.S. Commerce Department issued its final report Wednesday on the trade gap for 2018. The trade deficit for goods and merchandise set a new record of $891 billion. The report also showed the largest-ever gap with China, sitting at $419 billion.

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Including goods and services for the entire year, the total deficit is $621 billion, the highest since 2008.

President Donald Trump's "America First" policy led to new trade agreements with Canada and Mexico and has driven the administration to seek a more favorable deal with China. Representatives of both governments have met to discuss the prospects and experts have said an agreement could be announced this month.

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Trump has previously called the trade deficit "unsustainable" and said it represents a transfer of wealth from the United States to foreigners.

A significant factor in the historically large deficit are tariffs from the administration against numerous foreign-made products such as solar panels, washing machines and raw building materials like steel and aluminum.

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Trump has said the tariffs are intended to protect U.S. jobs and take a stand against what he views as poor business arrangements with Beijing. The tariffs are a major factor in the ongoing trade war between Washington and Beijing.

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China has offered to buy $1.2 trillion in additional U.S. products over the next six years in exchange for removing tariffs on both sides.

Economists said activity from cash-fluid businesses and consumers helped increase the buying of imports while the overvalued dollar weighed on exports.

"Macroeconomics end up ruling. You can't wish it away. You can't tariff it away," said William Reinsch, a former Commerce Department official who works at the Center for Strategic and International Studies.

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The record $891 billion deficit shattered the previous high of $838.3 in 2006, a time when the U.S. housing market was near its peak.

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