The U.S. trade deficit surged to its highest level in a decade, even as President Donald Trump levied new tariffs on goods and services imported from overseas in an effort to narrow the gap.
The U.S. international trade deficit in goods and services increased to $55.5 billion in October from $54.6 billion in September, according to Census Bureau data. Exports, meanwhile, declined for a fourth time in five months.
Even as Mr. Trump pushes to narrow the deficit -- the difference between a country's exports and imports -- demand for foreign-made products is spurring companies to import more foreign-made goods to the U.S. But consumers are also paying a price, according to Tariffs Hurt the Heartland, a lobbying coalition of manufacturing, farming and technology groups. U.S. companies paid $6.2 billion in tariffs in October, including $2.8 billion in new tariffs on imports that have been imposed by the Trump administration, the group said on Friday.
"This data shows that tariffs have been an unmitigated failure in achieving any of the administration's goals," said Charles Boustany, spokesman for Tariffs Hurt the Heartland and a former Republican congressman, in a statement. "All that's happening is businesses and consumers are paying more, American exports subject to retaliation are rapidly declining, and the deficit the Administration cares so much about is ballooning."
As U.S. businesses import more products from overseas, they are subject to higher taxes on those imports, thanks to the new tariffs imposed by the Trump administration. A 10 percent tariff on $200 billion in Chinese goods took effect in September. Despite those new tariffs, the trade gap with China also widened in October, increasing by $700 million to $38.2 billion.
"We are now seeing the raw data behind the stories of tariff pain that are coming in from every corner of the country," Boustany said.
Heavy manufacturers are also raising prices, including United Technologies, which makes Pratt & Whitney jet engines, Otis elevators and Carrier air conditioners. Some companies have said they will cut jobs due to the impact of the tariffs, such as toolmaker Stanley Black & Decker, which on Thursday said it was making an unspecified number of layoffs due in part to tariffs and higher costs.
The trade imbalance isn't likely to narrow anytime soon, economists said.
"Moderating global momentum, the stronger dollar and protectionist trade policies will keep weighing on exports in the near-term, while sturdy domestic demand and limited spare capacity keep import growth healthy – further widening the deficit," Jake McRobie and Gregory Daco, economists at Oxford Economics, said in a report.