U.S. and Chinese delegations meet Feb. 21, 2019, to continue discussions on the U.S.-China trade relationship. | Mandel Ngan/AFP/Getty Images Trade U.S. trade gap with China reaches all-time high under Trump

The U.S. trade deficit in goods with China set a new record during President Donald Trump’s second year in office, despite his efforts to rein in what the administration views as Beijing's trade transgressions. The trade gap rose to $419.2 billion in 2018, from the previous record of $375.5 billion in 2017, a Commerce Department report released Wednesday showed.

A senior Democrat slammed Trump for failing to make progress on his promise of reducing the overall goods deficit, despite lobbing tariffs at both China and other trade partners in 2018.


"Today's announcement that the merchandise trade deficit for 2018 topped $891 billion shows that the president has flunked the test he set for himself," said House Majority Leader Steny Hoyer in a statement. "It is time for President Trump to acknowledge that his scattershot approach to trade policy is failing and explain how he intends to change course and reverse these record deficits."

Over the course of last year, Trump imposed tariffs on over $250 billion worth of Chinese goods to pressure Beijing into trade talks between the two countries that could produce an agreement in coming weeks.

The negotiations are aimed in part at reducing the U.S. trade gap with Beijing, but imports from China actually increased during the last months of 2018, as companies sought to get ahead of Trump’s initial plan to raise his 10 percent duty on $200 billion worth of Chinese goods to 25 percent on Jan. 1. The other $50 billion in Chinese goods already faces a 25 percent tariff.

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Trump delayed the planned tariff increase to March 2 and recently postponed it indefinitely, saying that talks with China had made substantial progress towards a deal. That could result in China buying more U.S. soybeans, liquefied natural gas and manufactured goods like Boeing airplanes. But any reduction in the U.S. trade gap with China could be offset by higher deficits with other countries, as U.S. exports are diverted away from other markets.

The United States imported $539.5 billion worth of goods from China in 2018, compared with $505.5 billion in 2017. U.S. goods exports to China totaled $120.3 billion last year, dropping from nearly $130 billion in 2017. Beijing responded to Trump’s tariffs by imposing duties on about $110 billion of U.S. exports.

A spokesperson for the U.S. Trade Representative’s office did not respond directly when asked how a trade deal with China might address a growing trade deficit. Instead, she pointed to the goals outlined in the administration’s recently released trade policy agenda, which outlined a strategy for “rebalancing the global economy” through policies of imposing tariffs for national security reasons, pursuing new trade deals with strategic partners and enforcing U.S. trade laws.

More specifically, the spokesperson highlighted page 30 of the report, which recognizes a persistent imbalance with countries like China, Japan, Germany and South Korea and the need to address the issue in 2019.

“The administration has already taken significant steps to create a more balanced and sustainable trading system, including by withdrawing from the TPP, revising NAFTA and KORUS, and ramping up enforcement of U.S. trade remedies laws,” the report says.

Trump also levied tariffs of 10 percent on aluminum and 25 percent on steel on the grounds that imports of those two metals from a host of trading partners posed a threat to national security because they undermined the strength of the domestic industry.

Against that backdrop, overall imports of U.S. goods and services continued to rise on the strength of the U.S. economy, which grew by an estimated 2.9 percent in 2018 compared with 2.2 percent in 2017.

Overall imports grew 7.5 percent, to a record $3.1 trillion, while overall exports grew 6.3 percent, hitting a record $2.5 trillion, a Commerce Department highlights sheet showed. The resulting overall trade deficit of $621 billion was the highest since 2008. Both the goods trade deficit and the services trade surplus individually set records.

The U.S. trade deficit tends to rise when the economy grows because American businesses and consumers increase purchases of all goods, including imports.

In contrast, the trade deficit decreased by about 45 percent in 2009 during the period known as the Great Recession, when the U.S. economy contracted by more than 4 percent and businesses and consumers sharply cut back on spending.

The United States imported record amounts of goods in several categories in 2018, including food, feeds, and beverages ($147.4 billion), capital goods ($693.3 billion), automotive vehicles, parts, and engines ($372.3 billion), and consumer goods ($647.9 billion).

Trump is currently mulling whether to impose a tariff on imports of autos and auto parts to protect U.S. national security, a move that could expose the United States to more trade retaliation from countries in Europe and Asia.

The U.S. had record exports to 53 countries in 2018 led by Mexico ($265 billion), Japan ($75 billion), and the United Kingdom ($66.2 billion), and record imports from 60 countries led by China, Mexico ($346.5 billion), and Germany ($125.9 billion), the Commerce Department said.

The U.S. energy boom pushed petroleum exports to a record $172.4 billion, reducing the petroleum trade deficit to it lowest level since 1998, the department said.

Adam Behsudi contributed to this report.