WASHINGTON (AP) — The U.S. trade deficit increased to a record $73.3 billion in August as a small gain in exports was swamped by a much larger increase in imports.
The Commerce Department reported Tuesday that the monthly trade deficit increased 4.2% in August, rising to an all-time high, surpassing the previous record of $73.2 billion set in June. The trade deficit represents the gap between what the country exports to the rest of the world and the imports it purchases from other countries.
In August, exports rose 0.5% to $$213.7 billion, reflecting revived overseas demand. But imports, even with all the supply chain problems at ports, were up an even stronger 1.4% to $287 billion.
The politically sensitive goods deficit with China surged 10.8% to $31.7 billion in August. This year’s deficit with China through eight months totals $218.9 billion, up 13.7% from the same period a year ago.
The total deficit so far this year $558.1 billion, 33.7% higher than last year when pandemic-related shutdowns curbed Americans’ appetite for foreign goods.
Analysts said they expect the deficit surge will start to lessen now that other economies are beginning to revive and purchase more exports. However, some cautioned that the global supply chain problems could hurt both exports and imports in coming months.
“The shutdown of a significant chunk of the global auto industry last month suggests that the sharp falls in auto exports and import in August has further to run,” said Andrew Hunter, senior U.S. economist at Capital Economics. The auto industry has been particularly hard-hit by the supply chain problems involving computer chips.
Katherine Tai, the Biden administration’s top trade negotiator, announced Monday that the United States plans to launch new trade talks with China but will maintain the Trump-era tariffs as it pushes to get China to fulfill pledges it has made to buy more U.S. goods and services.
The Biden administration has spent months since coming into office reviewing the economic relationship with China, the world’s second largest economy.