US trade deficit narrows on falling imports

 

February saw the US trade deficit fall to its lowest level in four months as Americans imported fewer goods while exports held steady, the Commerce Department reported Tuesday.

In its biggest monthly drop since September, the gap shrank 9.6 percent to a seasonally adjusted $43.6 billion on falling imports of cars, consumer goods, fuel and semiconductors.

Analysts were expecting a decrease after the deficit ballooned in January, with revised figures putting that month at the highest level since March of 2015, or $48.2 billion.

In the year to date, however, the deficit was still up 3.1 percent over the same period in 2016.

Trade issues will likely be front and center during meetings later this week between President Donald Trump and Chinese President Xi Jinping.

Commerce Department data showed Tuesday that the US deficit with China gained $1.6 billion to $31.7 billion in February.

Trump's arrival in the White House on an agenda of economic nationalism and revitalized manufacturing and industry has put trade under a bright political spotlight.

Trump has pledged to turn prevailing trade policy on its head, vowing to renegotiate or scrap trade deals, possibly reversing much of the trade liberalization of recent decades.

In a statement released later Tuesday, Commerce Secretary Wilbur Ross said the new administration would press ahead toward its goals.

"While we?ve seen an improvement in the trade figures between January and February, we continue to be very focused on eliminating our nation?s trade imbalance," Ross said.

Ross underscored the importance of executive actions Trump took last week, ordering a review of trade deficits and foreign violations of US trade laws and also instituting new procedures to collect duties from "cheating" importers.

Overall US exports of goods rose 0.2 percent for the month to $192.9 billion, with exports of cars, auto parts and engines hitting their highest level since July 2014 and industrial supply exports rising to the highest point in 14 months.

But imports fell 1.8 percent to $236.4 billion, down $4.3 billion, driven in part by a $2.6 billion decrease in car imports.

The deficit with Japan fell $600 million to $4.9 billion. The deficit with Germany was also the lowest in more than four years at $3.9 billion. But the deficit with Mexico rose 11.3 percent to $6.2 billion.

Jim O'Sullivan of High Frequency Economics said figures from the first two months of the year suggested net exports were likely to be neutral in calculations of first-quarter economic growth.

"In short, a big drop in the deficit, more than reversing a large rise in January," he wrote in a client note.

Blerina Uruci of Barclays (LSE: BARC.L - news) told clients on Tuesday that, along with March's decline in car sales, Tuesday's trade figures put first-quarter estimates of GDP growth at 1 percent over the final three months of 2016.

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