08.03.201801:58:00UTC+00U.S. Trade Deficit Grew to Over a 9-Year Peak

The U.S. trade deficit rose to a more than nine-year high in January, with the shortfall with China widening sharply, suggesting that President Donald Trump's “America First” trade policies aimed at eradicating the deficit will likely fail.

The trade gap continues to widen a year into the Trump presidency. Trump, who claims that the United States is being taken advantage of by its trading partners, has imposed tariffs on imports of some goods and threatened punitive measures on others to shield domestic industries from competition. The protectionist measures have fueled fears of a trade war.

According to the Commerce Department, the trade deficit soared 5.0 percent to $56.6 billion. That was the highest level since October 2008 and exceeded economists' expectations of an increase to $55.1 billion. Part of the rise in the trade gap in January reflected higher commodity prices.

The politically sensitive goods trade deficit with China surged 16.7 percent to $36.0 billion, the highest since September 2015. The deficit with Canada soared 65 percent to a three-year high of $3.6 billion. China and Canada are the United States' top trading partners.

The economy is almost at full employment, the increase in demand spurred by the $1.5 trillion tax package will probably be satisfied with imports, further worsening the trade deficit.

The economy's strong fundamentals were highlighted by a separate report from ADP Research Institute showing private employers added 235,000 jobs in February.

The report, which is jointly developed with Moody's Analytics, was published ahead of the government's more comprehensive employment data on Friday.

The unemployment rate is forecast falling one-tenth of a percentage point to 4.0 percent, which would be the lowest level since December 2000.

The economy expanded at a 2.5 percent annualized rate in the fourth quarter. Growth estimates for the first quarter are around a 2.0 percent pace.