WASHINGTON -- The deficit in the broadest measure of U.S. trade rose to the highest level in more than eight years this spring, reflecting in part a drop in fines and penalties paid by foreign companies.
The deficit in the current account increased to $123.1 billion, up 8.5 percent from an imbalance of $113.5 billion in the first quarter, the Commerce Department reported Tuesday. It was the biggest deficit since a gap of $150 billion in the fourth quarter of 2008.
The current account is the most complete measure of trade because it includes not only goods and services but investment flows and other payments between the United States and the world.
President Donald Trump has promised to reduce America's trade deficit, contending it costs U.S. factory jobs.
One of the biggest contributing factors to the larger deficit in the April-June quarter was a decline in receipts from foreigners after they had risen sharply in the first quarter. The government attributed the $5.2 billion decrease in receipts of secondary income from foreigners to a decline in fines and penalties paid by foreign companies. That category had risen sharply in the first quarter.
Exports of goods and services increased $2.2 billion in the second quarter. Exports are getting a lift from a pickup in global growth and a drop in the value of the U.S. dollar against other currencies. A weaker dollar makes American products more competitive in foreign markets.
Imports of goods and services were also up in the second quarter, rising $11.8 billion, reflecting rising domestic demand from stronger U.S. growth.
The rise in the current account deficit put the imbalance in the second quarter at a level equivalent to 2.6 percent of the total economy, as measured by the gross domestic product, up from 2.4 percent in the first quarter. By comparison, the largest current account deficit in relation to GDP was in the fourth quarter of 2005 when the deficit totaled 6.3 percent of GDP.
Trump said America's trade deficits have been caused by bad trade deals and abusive practices by China and other U.S. trading partners. He has pledged changes that he said will reduce the deficit and bring back American factory jobs.
The European Union Chamber of Commerce urged China on Tuesday to carry out promises to open its economy and warned that inaction might fuel a backlash against free trade amid mounting U.S. and European criticism.
The European Union Chamber of Commerce said in a report that China is backtracking in some areas, including by imposing new restrictions on food imports, express delivery and legal services. It proposed hundreds of possible changes to open the state-dominated economy wider or simplify rules in fields from cosmetics to medical devices.
"The current lack of reciprocity in market access is becoming politically unsustainable," the European chamber president, Mats Harborn, said at a news conference. "We are worried that if this is not quickly changed, there will be a backlash against economic globalization."
The chamber's American counterpart and other groups have issued similar appeals.
China faces mounting complaints from Washington and the European Union about its trade surpluses and barriers to foreign acquisitions of Chinese assets while its own companies are buying foreign brands and technology.
Information for this article was contributed by Joe McDonald of The Associated Press.
Business on 09/20/2017