US trade deficit jumps to near five-year-high of $48.5bn

This was the largest monthly gap since a deficit of $50.2bn in March 2012

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The US chalked up its largest trade deficit in nearly five years in January, suggesting trade will again weigh on economic growth in the first quarter.

The deficit in January jumped 9.6 per cent to $48.5bn, compared to a deficit of $44.3bn in December, Commerce Department figures revealed on Tuesday.

While the figures are in line with expectations, this was the largest monthly gap since a deficit of $50.2bn in March 2012.

Reducing trade deficit was a key pledge of Donald Trump's presidential campaign last year and the latest figures could be seized as evidence of the need for the US to renegotiate deals with some of its major trading partners.  

The new US administration under Mr Trump has strained the global trade outlook by pledging to prioritise national interests and lashing out at market-opening initiatives such as the Trans-Atlantic Trade and Investment Partnership with the EU.

The wider trade gap, attributed to a 2.3 per cent gain imports while exports increased by just 0.6 per cent, added to weak data such as housing starts, consumption and construction spending in suggesting the economy struggled to regain momentum early in the first quarter.

The data also showed the politically sensitive trade gap between the US and China, the world’s second-biggest economy, widened to $31.3 bn in January from $27.8 bn on an unadjusted basis.

However, the trade deficit with Mexico narrowed to $3.9bn, the smallest since July 2015.

White house trade adviser Peter Navarro in an address to economists in Washington on Monday depicted chronic trade deficits as a threat to national security and said the Trump administration would seek to "reclaim" parts of supply chains that had moved overseas.

Additional reporting by agencies