Overall, the goods trade balance continues to be in deficit, while the surplus in services trade dropped slightly in December to Dollars 20.2 billion.
The high level of imports is a product of a strong US economy faced with mercantilist policies overseas. "The first-year Trump jump in the USA trade deficit adds urgency to the administration actually securing a NAFTA replacement deal that ends NAFTA's job outsourcing incentives and implementing a new China trade policy".
"We have made the point that when an economy is at full employment, an acceleration in demand tends to be accompanied by a pickup in import growth and a wider trade deficit", the note said.
With two of Trump's main targets, China and Mexico, the imbalances worsened in 2017. Imports, however, rose by more: 2.5 percent to $256.5 billion.
Trump has often hit Mexico and China the hardest on trade, and his administration is now in the process of renegotiating the North American Free Trade Agreement (NAFTA). America's merchandise-trade gap with China, the world's second-biggest economy, widened 8.1 percent in 2017 to a record $375.2 billion.
The politically sensitive US-China trade deficit increased 8.1 per cent to a record $US375.2 billion past year.
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The president has to decided in the next couple of months whether he will act on the steel and aluminum case reports on his desk that argue for higher tariffs based on national security concerns, a move the US has rarely used in the past because of risks that USA exports could pay the price in retaliation.
Imports for December were up by $6.2bn versus November. "Looking ahead, we expect the trade deficit to widen further in 2018", said Gregory Daco, chief USA economist at Oxford Economics. The economists interviewed expected a low value of 52.2 billion United States dollars.
The United States also recorded a record level of goods imports from 47 countries, including China (505.6 billion), Mexico (314 billion) and Italy (50 billion). Imports advanced 2.5 percent to $256.5 billion, boosted by record US purchases of consumer goods, capital goods and food products.
Trade was a hallmark issue of President Donald Trump's campaign.
The monthly figures add to details for the fourth quarter, when trade was a substantial drag on the economy, and show how a widening deficit may mitigate any gains in the pace of expansion in 2018.
