D.he American trade deficit surprisingly rose to a record level in August. Imports exceeded exports by $ 73.3 billion, the Department of Commerce in Washington announced on Tuesday. Economists polled by Reuters news agency had expected $ 70.5 billion. The deficit grew by 4.2 percent compared to the previous month.
The main reason for this was that total imports climbed 1.4 percent to a record high of $ 287 billion. Exports only increased by 0.5 percent, but reached almost $ 214 billion, the highest level since May 2019.
United States threatens financial blockade
Former US President Donald Trump has repeatedly interpreted the traditionally high deficit as a sign that his country is being ripped off by other states – and therefore instigated trade conflicts, for example with China and the European Union.
The US and China are currently making a fresh attempt to defuse their trade dispute. The US National Security Advisor, Jake Sullivan, will hold talks in Switzerland with the top Chinese diplomat Yang Jiechi until Wednesday, the “South China Morning Post” reported on Tuesday. “You want to restore the communication channels and implement the consensus reached between Presidents Xi Jinping and Joe Biden,” it said, citing a government official who is familiar with the preparations for the meeting.
If the US debt ceiling is not increased or suspended, the country faces a financial deadlock in October. Such a default would plunge the United States into recession, according to Treasury Secretary Janet Yellen. the consequences would be “catastrophic,” warned Yellen on Tuesday on CNBC TV. “I absolutely expect that this would also cause a recession,” said the minister.
The two parties in Congress blame each other in the dispute over the ceiling increase. President Joe Biden, a Democrat, only accused the Republicans on Monday of blocking the increase for political reasons and thus playing “Russian roulette” with the US economy. A default would jeopardize the US dollar’s reserve currency status and lead to higher interest rates for American consumers, he warned.