U.S. trade gap rises to highest level since 2008

  • U.S. trade gap rises to highest level since 2008

U.S. trade gap rises to highest level since 2008

A boy looks at cargo ships passing along the Pearl River in Guangzhou, Guangdong province, August 6, 2014. The U.S. president has threatened a host of actions to constrain China, including tariffs on imports of steel and aluminum he plans to announce Thursday. Trump, who has claimed that the United States is being taken advantage of by its trading partners, in late January imposed broad tariffs on imported solar panels and large washing machines.

Analysts at UBS also attribute the export growth partly to a low base in January, and a weaker dollar which inflates the USD value of any export figures.

Exports rose 24.4 percent on-year in Jan-Feb, much better than 10.8 percent in December and 4 percent growth in Jan-Feb last year. Mizuho limited their speculation as to the driving force of the export growth, saying "we need to see more incoming data to confirm whether the upside came from an on-going strong recovery overseas".

'The U.S.is acting swiftly on Intellectual Property theft.

Last year, an independent commission on USA intellectual property estimated that the annual cost to the economy in counterfeit goods, pirated software, and theft of trade secrets from all sources exceeds $225 billion and could be as high as $600 billion.

Exports fell 1.3 per cent to US$200.9 billion in January, and imports were flat at US$257.5 billion.

Boosted by a global trade boom, China's exports a year ago grew the fastest since 2013 and served as one of the key drivers behind the economy's forecast-beating 6.9 percent expansion.

The trade gap continues to widen a year into the Trump presidency. "China does not want a trade war with the United States, but if the USA takes actions to hurt China's interests, China will not sit idly by and will take the necessary measures", Zhang said.

The measures are expected to go into effect in about two weeks, but economists see little immediate impact on China.

This comes as the USA administration is planning to raise tariffs on steel and aluminium imports by 25 and 10 percent respectively.

"All in all, the direct impact on China is minimal", Pang said in a note published on Thursday. This will affect China, which is the world's largest steel producer and a leading aluminium exporter.

With Australia due to sign the re-formed Trans Pacific Partnership regional trade agreement, TPP11, with Japan and Canada among the 11 signatories, Mr Wang called for better coordination of regional free trade deals so they complemented each other.

USA plans to combat intellectual property theft, which are believed to be moving quickly through the pipeline, could also have a more significant impact on China's exporters, particularly in hi-tech, high-value industries. China's global tech exports saw strong double-digit gains in the first two months of this year.

"History tells us a trade war is never the right solution".

A looming trade war is certainly a downside risk to China's near-term trade outlook, but opinions are divided on whether the latest round of tariffs on steel and aluminium, which now comprise only 3% of China's exports, will create much of a disturbance.

While China's role could lose more than U.S. in a possible trade war because it is one who records surplus, Capital Economics consultancy recalls that United States has very few destinations to go to if it wants to stop buying from China, because Asian giant is by far world's largest supplier of several of products that United States acquires.