White House optimistic on China trade talks

US Trade Representative Robert Lighthizer

US Trade Representative Robert Lighthizer

America's trade deficit with the world jumped 12.5 per cent to $621 billion, the Commerce Department reported, as both imports and exports rose to the highest levels ever.

In December, the overall goods and services deficit rose to $59.8 billion, up 18.8 percent percent from November, in the largest monthly deficit since 2008. The recent widening in the deficit has been driven in part by weakening exports, according to Daniel Silver, an economist at JPMorgan. Beijing is offering to lower tariffs and other restrictions on American farm, chemical, auto and other products and Washington is considering removing most, if not all, of the sanctions recently levied against Chinese products, the newspaper said.

And while the widening trade gap can be seen as an embarrassing data point for the President, it underscores how the asymmetry in the U.S.

A source briefed on the negotiations told Reuters the two countries appear close to a deal that would roll back USA tariffs on at least $200 billion worth of Chinese goods.

But the trade war is also hitting business operations at home in the USA, as well as the American consumer.

The president has previously called the trade gap "unsustainable".

A spokeswoman for Trump's Council of Economic Advisers declinedcomment on the new papers and referred inquiries to the office of U.S. Trade Representative Robert Lighthizer. Harvard Kennedy School professor Jeffrey Frankel warned in January 2018 that "the increase in spending afforded by tax cuts goes entirely, rather than only partly, into the current-account deficit".

But America's dependence on imports seems to have increased after the tariffs that Mr. Trump imposed past year on foreign steel, aluminum and Chinese products. "We can turn it all around-and we can turn it around fast", he said at the time.

While Trump often blames poor trade agreements for the trade deficit, that may not be the whole story.

A trade deficit occurs when a nation's imports exceed its exports.

Donald J. Trump on Twitter: "I have asked China to immediately remove all Tariffs on our agricultural products (including beef, pork, etc.) based on the fact that we are moving along nicely with Trade discussions...."Donald J. Trump on Twitter: "....and I did not increase their second traunch of Tariffs to 25% on March 1st".

Weinstein's study, co-written withMary Amiti of the Federal Reserve Bank of NY, and Princeton University's Stephen Redding, reviewed what actually occurred previous year after U.S. tariffs took effect and concluded that Americans paid the entire tariff bill.

The United States is working to hammer out a detailed trade agreement with China that will include specific structural commitments, U.S. Treasury Secretary Steven Mnuchin told CNBC on Thursday.

Trump on Friday asked China to immediately remove all tariffs on U.S. agriculture, though he didn't indicate if his demand was limited to retaliatory duties or more far-reaching.

The strength of the USA dollar has also not been helpful to the administration's aims, as it makes imports relatively cheaper while increasing the price of US products to the rest of the world.

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