Tag Archives: trade gap

U.S. trade deficit hits eight-month low as Chinese imports drop

FILE PHOTO: A container ship is shown at port in Long Beach, California, U.S. July 16, 2018. REUTERS/Mike Blake

By Lucia Mutikani

WASHINGTON (Reuters) – The U.S. trade deficit fell to an eight-month low in February as imports from China plunged, suggesting President Donald Trump’s “America First” agenda was starting to bear fruit.

The surprise narrowing in the trade gap reported by the Commerce Department on Wednesday also implied a much stronger pace of U.S. economic growth in the first quarter than initially anticipated at the start of the year.

The 20.2 percent drop in imports from China was the main driver behind a nearly 3.4 percent improvement in the U.S. trade deficit to $49.4 billion, data from the Commerce Department showed. Economists polled by Reuters had forecast the trade shortfall would widen to $53.5 billion in February.

The politically sensitive goods trade deficit with China – a focus of the Trump administration’s protectionist trade policy – decreased 28.2 percent to $24.8 billion in February as U.S. exports to the world’s No. 2 economy jumped 18.2 percent.

But even with the improvement, the trade deficit remains large and February’s drop in Chinese imports could be temporary. The trade data have been volatile in recent months amid big swings between exports and imports, because of the United States’ conflicts with trading partners, including China.

Washington last year imposed tariffs on $250 billion worth of goods imported from China, with Beijing retaliating with duties on $110 billion worth of American products. Trump has delayed tariffs on $200 billion worth of Chinese imports and talks to end the trade impasse continue.

The U.S. goods trade deficit declined 1.7 percent to $72.0 billion in February, also the lowest level since last June.

When adjusted for inflation, the overall goods trade deficit fell $1.8 billion to $81.8 billion in February. The average goods trade deficit for January and February is below the fourth-quarter average. This suggests that trade could provide a boost to gross domestic product in the first quarter after being neutral in the October-December period.

SLOWING DOMESTIC DEMAND

Growth estimates for the January-March quarter are in a 1.5 percent to 2.3 percent annualized range, largely reflecting an accumulation of inventories amid slowing domestic demand. The economy grew at a 2.2 percent rate in the fourth quarter, slowing from the July-September period’s brisk 3.4 percent pace.

U.S. Treasury yields rose slightly after the release of the data. U.S. stock index futures were trading higher while the dollar was largely unchanged against a basket of currencies.

The trade deficit in February was pushed down by a 1.1 percent jump in exports to $209.7 billion. Exports of services were the highest on record.

Goods exports increased 1.5 percent to $139.5 billion in February. The surge in goods exports is a hopeful sign for global economic growth, which has showed signs of slowing in recent months.

Exports of motor vehicles and parts increased by $0.6 billion in February. Shipments of civilian aircraft soared by $2.2 billion in February. But commercial aircraft exports are likely to decline in the months ahead following Boeing’s decision to suspend deliveries of its troubled 737 MAX aircraft.

The MAX planes have been grounded indefinitely following two deadly crashes.

There was a modest increase in soybean exports.

In February, imports rose 0.2 percent to $259.1 billion. Consumer goods imports increased by $1.6 billion in February, led by a $2.1 billion rise in imports of cellphones and other household goods. Imports of industrial supplies and materials fell by $1.2 billion. Capital goods imports rose slightly.

Crude oil imports fell to 173.7 million barrels, the lowest since March 1992, from 223.1 million barrels in January. An increase in domestic production has seen the United States become less dependent on foreign oil.

Imported oil prices averaged $46.89 per barrel in February, up from $42.59 in January.

(Reporting by Lucia Mutikani; Editing by Paul Simao)

U.S. trade deficit rises to ten-month high in June

Freighters and cargo containers sit idle at the Port of Los Angeles as a back-log of over 30 container ships sit anchored outside the Port in Los Angeles

WASHINGTON, Aug 5 (Reuters) – The U.S. trade deficit rose to a 10-month high in June as rising domestic demand and higher oil prices boosted the import bill while the lagging effects of a strong dollar continued to hamper export growth.

The Commerce Department said on Friday the trade gap increased 8.7 percent to $44.5 billion in June, the biggest deficit since August 2015. May’s trade deficit was revised slightly down to $41.0 billion.

June marked the third straight month of increases in the deficit. Economists polled by Reuters had forecast the trade gap widening to $43.1 billion in June after a previously reported $41.1 billion shortfall. When adjusted for inflation, the deficit rose to $64.7 billion from $60.9 billion in May.

The government in its snapshot of second-quarter gross domestic product published last week said trade had contributed two-tenths of a percentage point to the 1.2 percent annualized growth pace during the period.

The dollar’s sharp rally against the currencies of the United States’ main trading partners between June 2014 and December 2015 has undercut export growth.

With the dollar weakening this year on a trade-weighted basis, some of the drag on exports had started to ebb. But the dollar has been regaining strength in the wake of Britain’s June 23 vote to leave the European Union, and economists say that could renew pressure on exports.

Exports of goods and services edged up 0.3 percent in June.

Exports to the European Union jumped 7.8 percent, with goods shipped to the United Kingdom soaring 18.2 percent. China bought more U.S.-made goods in June, with exports to that country rising 3.6 percent.

Imports of goods and services increased 1.9 percent to $227.7 billion in June, with oil prices accounting for part of the rise. Oil prices averaged $39.38 per barrel in June, the highest level since October of last year, from $34.19 in May.

The $5.19 increase in the average oil price in June from May was the biggest since May 2011.

June’s increase in imports also reflected a pickup in domestic demand. Imports from China increased 2.8 percent. With imports outpacing exports, the politically sensitive U.S.-China trade deficit rose 2.5 percent to $29.8 billion in June, the biggest gap since last November.