US trade deficit rose slightly in March, but it remained below year-ago levels as its trade deficit with China, its biggest trading partner, fell to its lowest in three years, on the back of a decline in imports amid a festering trade dispute.
The report from the Commerce Department on Thursday showed that US goods trade deficit with China dropped to a five-year low in March amid a surge in exports, including soybeans.
US President Donald Trump said on Sunday he would raise tariffs on $200 billion worth of Chinese goods from 10 to 25 per cent by Friday with Beijing reneging on its agreement to review trade policies.
US goods trade deficit with China decreased 16.2 per cent to an unadjusted $20.7 billion, the lowest level since March 2014, while overall imports from China fell 6.1 per cent. Exports to China jumped 23.6 per cent in March, which showed President Trump’s “America First” policy is gaining ground.
When adjusted for seasonal fluctuations, the shortfall in trade with China tightened to $28.3 billion - the smallest since April 2016 and smaller than the $30.1 billion gap in February.
US last year imposed tariffs on $250 billion worth of goods imported from China and Beijing had hit back with duties on $110 billion worth of American goods.
However, US overall trade deficit increased 1.5 per cent to $50.0 billion in March while overall goods trade deficit increased 0.7 per cent to $72.4 billion in March.
US goods trade deficit with Mexico also hit a record high of $9.5 billion in March.
When adjusted for inflation, the overall goods trade deficit increased $0.5 billion to $82.1 billion in March.
The government reported last month that trade contributed 1.03 percentage points to the economy’s 3.2 per cent annualized growth pace in the first quarter. The economy continued to expand early in the second quarter, with mild inflation pressures and the labor market still tightening.
The rise in the overall trade deficit in March came as both exports and imports increased. Goods exports increased 1.4 per cent to $141.7 billion. Exports of industrial supplies and materials rose by $1.7 billion, while those of soybeans gained by $0.5 billion.
But shipments of civilian aircraft fell $0.7 billion in March. Commercial aircraft exports are likely to decline further after Boeing suspended deliveries of its troubled 737 MAX aircraft. The MAX planes have been grounded indefinitely following two deadly crashes.
Goods imports rose 1.2 per cent to $214.1 billion in March. Crude oil imports increased by $1.4 billion. Crude oil imports rose to 195.9 million barrels from 173.7 million barrels in February. Imported oil prices averaged $53.1 per barrel in March, up from $46.89 in February.
Food imports hit an all-time high of $13.1 billion. Consumer goods imports, however, fell amid declines in imports of cellphones and other household goods. Imports of industrial supplies and materials increased by $2.4 billion.