US trade deficit hits more than nine-year high in January as exports falter

The US trade deficit increased to a more than nine-year high in January, with the shortfall with China widening sharply, suggesting that President Donald Trump's "America First" trade policies are unlikely to have a material impact on the deficit. The Commerce Department said on Wednesday the trade gap jumped 5.0 percent to $56.6 billion. That was the highest level since October 2008 and followed a slightly upwardly revised $53.9 billion shortfall in December.

Economists polled by Reuters had forecast the trade gap widening to $55.1 billion in January from a previously reported $53.1 billion in the prior month. Part of the rise in the trade deficit in January reflected commodity price increases.

The politically sensitive trade deficit with China surged 16.7 percent to $36.0 billion, the highest since September 2015. The deficit with Canada was the highest in three years.

Protectionist measures increase risk of trade war, warns WTO chief

There is a "clear" risk of a trade war happening because of protectionist policies, the World Trade Organisation chief Roberto Azevedo has said.

The WTO's director-general did not implicate any countries by name behind such policies, even though he was asked about the effects US President Donald Trump's "America First" stance could have on the global trading system.

"The risk of a trade war is very clear," Azevedo told reporters yesterday during a visit in Panama.

"Once a country, whichever one, applies unilateral measures, there is a response from others and we could see a domino effect," he said.

"The reality is that, at the end of the process, if we have a trade war everybody without exception will be worse off than when it starts."

Since entering the White House, Trump's administration has talked about the US trade deficit vis-a-vis several countries, notably China and Mexico.
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