November 29, 2023

The US trade deficit rose to a record high in August

The US trade deficit rose to a record high in August

DrThe US trade deficit unexpectedly rose to a record high in August. The Commerce Department in Washington announced Tuesday that imports exceeded exports by about $73.3 billion. Economists polled by Reuters had expected $70.5 billion. The deficit grew by 4.2 percent compared to the previous month.

The main reason for this is a 1.4% increase in total imports to a record $287 billion. Exports increased only 0.5 percent, but reached nearly $214 billion, the highest level since May 2019.

The United States threatens a financial embargo

Former US President Donald Trump has repeatedly interpreted traditionally high deficits as a sign that his country is being plundered by other countries – thus triggering trade conflicts, for example with China and the European Union.

The United States and China are currently making a new attempt to defuse their trade dispute. US National Security Adviser Jake Sullivan will hold talks in Switzerland with China’s top diplomat Yang Jiechi until Wednesday, the South China Morning Post reported Tuesday. “You want to restore communication channels and implement the consensus reached between Presidents Xi Jinping and Joe Biden,” she said, quoting a government official familiar with the preparations for the meeting.

If the US debt ceiling is not raised or suspended, the country will be in financial trouble in October. Treasury Secretary Janet Yellen said such a default would plunge the US into recession. Yellen warned Tuesday on CNBC that the consequences would be “catastrophic.” “I fully expect this to also lead to a recession,” the minister said.

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The two parties in Congress blame each other for the row over raising the ceiling. Democratic President Joe Biden on Monday accused Republicans of holding up the increase for political reasons and thus playing “Russian roulette” with the US economy. He warned that a default would jeopardize the dollar’s reserve currency position and lead to higher interest rates for US consumers.