The US trade deficit soared in August as surging Chinese imports worsened global economic imbalances and stoked rising American anger with China’s exchange rate policy.
The data, published on Thursday, come ahead of Friday’s release deadline for the US Treasury’s twice-yearly report on exchange rates, in which it has to decide whether or not formally to name China as a currency manipulator. Despite congressional pressure, the Treasury has so far refrained from using the label, arguing that it makes no practical difference to relations with Beijing.
On the campaign trail for November’s midterm elections, there have been repeated references to the impact of Chinese trade on US jobs. The political factors may tip the balance somewhat towards breaking with precedent and labelling China a manipulator. But most informed observers in Washington think the Treasury will continue to hold back. The report earlier in the year was postponed for several months, in effect to give China time to allow the renminbi to start rising, but officials say the report – or a statement about it – should be released on time this week.