By Joyce Yu
Philadelphia, PA–US trade deficit continues to widen even as President Trump battles with China and other key trade partners. Report released by the Bureau of Labor Statistics today shows the imbalance increased $3.2 billion in August to $53.2 billion as soybean exports slumped. For the calendar year, the trade deficit is up $31 billion or 8.6%from a year ago.
Soybean exports, a hotly contested point of the trade war with China, fell $1 billion for the month. In an effort to narrow the balance between imports and exports, the Trump administration has imposed several rounds of retaliatory tariffs over Chinese goods, putting almost all of China exports to US on the line. Yet the U.S. has a $261.1 billion deficit with China year to date, $38.6 billion of which came in August.
With steel and aluminum tariffs instituted across the board, the US is in talks with the European Union, India and other major trading partners. The latest report shows industrial supplies and materials exports declined $2.4 billion, food, feeds and beverages shrunk $1.2 billion, while consumer goods rose $1.6 billion. Imports of auto vehicles, parts and engines increased $1 billion while consumer goods import increased $900 million.
Adding to pressure on Wall Street today was a mixed employment data which saw the U.S. economy added 134,000 in September, far below the expected gain of 185,000, despite the record low unemployment rate since 1969. Wages, on the other hand, grew by 2.8% year-on-year in September.
“Nobody knows what to do with it because you have the hurricane effect in there,” JJ Kinahan, chief market strategist at TD Ameritrade, told the CNBC. “This is one of those job reports that had something for everyone.”
The Dow Jones Industrial Average plunged over 250 points as Caterpillar, IBM and Intel fell. The tech sector dragged down S&P 500 while the Nasdaq Composite declined as Amazon, Apple, Netflix and Alphabet all traded lower.
Higher wages as a result of tight labor market is expected to keep upward pressure on rates and continue to put downward pressure on stocks, analysts say. Meanwhile, comments from Federal Reserve Chair Jerome Powell hinted more hikes could be coming. He said that the Fed had a long way to go before interest rates would hit neutral.
