US trade deficit narrows in March on record exports

The US trade deficit narrowed in March for the first time in seven months as exports reached the highest level on record, the Commerce Department reported today.

The drop in the trade gap could point to higher growth in the first quarter than previously expected and comes as President Donald Trump pursues a fraught two-front trade confrontation with the European Union and China.

Rising exports of petroleum and agricultural staples as well as a steep drop in imports sent the monthly US trade deficit plunging to USD 49 billion, a 15.2 per cent drop from February, the biggest decrease in more than two years.

However, the deficit was still up 18.5 per cent in the first quarter compared to the same period last year, at USD 25.5 billion.

US exports of goods and services hit USD 208.5 billion, a new record, driven upwards by mounting exports of crude oil and other fuels as well as civilian aircraft and crops like soybeans, on which China has threatened to impose retaliatory tariffs.

Americans also paid less to foreign companies for the licensing of intellectual property, and bought fewer foreign-made televisions, semiconductors and computers, helping drive US imports down 1.8 per cent for the month to USD 257.5 billion.

Imports of foreign autos, however, hit a record USD 31.3 billion.

The goods deficit with China fell 11.5 per cent from February to USD 25.8 billion.

Imports from Mexico, which is locked in tense trade negotiations with the Trump administration, also hit a record at USD 30 billion, sending the US deficit with Mexico in goods alone to a record USD 8.1 billion, up from USD 6 billion in the prior month.

Exports to Canada, also a partner in the North American Free Trade Agreement, were the highest since October 2014 at USD 28.4 billion, for a trade surplus of USD 306 million for goods only, compared to a USD 404 million deficit in February.