U.S. trade deficit reached a record high last year

/ CBS/AP

The U.S. trade deficit jumped nearly 19 percent in December, pushing the trade imbalance for all of 2018 to a decade-long high of $621 billion, the Commerce Department said Wednesday.

The gap between what the United States sells and what it buys from other countries rose to $59.8 billion in December from $50.3 billion in November, the Commerce Department said. Adjusted for inflation, December was the highest imbalance of trade goods in U.S. history.

The gap worsened because Americans bought more household appliances, cell phones and computer products from abroad, while foreign demand for civilian aircraft and oil products declined, dragging down U.S. exports.

The figures undermine a key commitment by President Donald Trump, who promised to cut the trade imbalance on the belief that it would bring back overseas factory jobs and bolster the broader U.S. economy.

But America's dependence on imports seems to have increased after the tariffs that Mr. Trump imposed last year on foreign steel, aluminum and Chinese products. The goods trade deficit with China — the difference between goods exported and imported — rose to $419.2 billion, the highest number on record.

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An acceleration in economic growth last year from Mr. Trump's debt-funded tax cuts helped to boost the appetite for foreign goods

On an annual basis, the trade gap reached the largest total since 2008, when it was $708.7 billion. That imbalance fell in the aftermath of that year's financial crisis as the United States and other nations plunged into severe recessions.

Trump hit roughly half of Chinese imports with taxes last year, a move designed to kickstart trade negotiations with the goal of increasing exports to that country and stopping the forced turnover of U.S. technology and theft of intellectual property.

How international trade has changed under President Trump

China retaliated, and the simmering trade war roiled financial markets last year. U.S. and Chinese officials have recently signaled that they're close to some kind of agreement, although China has only bolstered its commitment to investing in and developing its technology sector and questions about how to enforce any trade rules remain.

With the trade gap growing, analysts are concerned it could slow down U.S. growth this year.

"[T]rade now looks set to be a more serious drag in the first quarter," Capital Economics wrote in a note. "With real consumption growth also set to slow following weakness in December, the upshot is that GDP growth remains on course to slow to only around 1.5% annualised in the first quarter."

In addition to a record trade gap in goods with China, the imbalance reached new peaks with Mexico ($81.5 billion) and the European Union ($169.3 billion). The United States ran a record surplus last year with South and Central America.

First published on March 6, 2019 / 9:47 AM

© 2019 CBS Interactive Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.

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