WASHINGTON – The U.S. trade deficit rose in December as American exports fell for a third straight month, reflecting the pressures of a stronger dollar and spreading global weakness. Those factors contributed to the first annual drop in U.S. export sales since the Great Recession shrank global trade six years ago.
The December deficit increased 2.7 per cent to $43.4 billion, the Commerce Department reported Friday. Exports fell by 0.3 per cent, driven by sales declines of civilian aircraft, autos and farm products. Imports increased 0.3 per cent as Americans bought more foreign-made cars and petroleum.
For all of 2015, the deficit rose 4.6 per cent to $531.5 billion. Exports fell 4.8 per cent, the first setback since 2009 when the world was in the grips of recession. Imports also retreated 3.1 per cent.
American exporters have been hurt by global economic weakness and a stronger dollar, which makes their products more expensive on overseas markets.
A wider trade deficit is a drag on economic growth because it means fewer overseas sales by American producers and larger imports of foreign goods. The deficit subtracted about one-half percentage point from growth in 2015, a year when the economy, as measured by the gross domestic product, grew by a modest 2.4 per cent.
Analysts say trade will also subtract from growth this year as well given that the dollar has continued to rise and China, the world’s second largest economy, is still struggling to cope with slowing growth.
“Modest global growth and a lofty currency will remain challenges for U.S. exporters going forward,” said Leslie Preston, an economist for TD Bank.
The U.S. deficit with China set a record in 2015, rising 6.6 per cent to $365.7 billion. The deficit with the European Union also set a record, rising 7.9 per cent to $153.3 billion.
The Obama administration is hoping to win congressional approval this year for a new trade agreement with 11 Asian nations but critics of the administration’s trade policies point to the rising deficits to bolster their arguments that past trade deals have cost American jobs.
For 2015, the U.S. deficit in petroleum products dropped to $82.5 billion, the lowest level since 1999. Falling oil prices trimmed U.S. exports of petroleum by 31.1 per cent to $99.5 billion last year. But U.S. imports of petroleum dropped by a larger 45.5 per cent to $182 billion. That was the lowest level for oil imports since 2004.
Imports of food, capital goods such as machinery and foreign-made autos and auto parts all set records in 2015, reflecting in part a stronger dollar which made foreign goods more competitive in the U.S. market.