Trade Deficit Ticks Up Despite Shrinking Gap With China

In this May 8, 2019, photo, a worker drives an electric cart past a display featuring the U.S. and Chinese flags in a special trade zone in Qingdao in eastern China’s Shandong province. (Chinatopix via AP)

(CN) – The overall U.S. trade gap grew by 1.5% in March, even though the closely watched deficit with China dropped to a five-year low.  

The difference between the number of goods and services the United States sells and buys from other countries increased to $50 billion, compared to $49.3 billion in February. Economists had predicted a trade deficit of about $50.2 billion.

The goods deficit with China dropped to $20.7 billion, a 16.2% decrease from the month before that marks the lowest level since March 2014.

American imports from China fell 6.1% while exports to that country spiked 23.6%, according to a Commerce Department report released Thursday.

President Donald Trump has made closing the trade gap with China a top priority, saying the deficit is the result of bad deals by past administrations. 

The year-long trade war with Beijing shows no sign of stopping, as the Trump administration is set to raise tariffs on $200 billion in Chinese products from 10% to 25% on Friday. Negotiators from both countries are still trying to iron out the dispute.

Exports to all countries increased by 1% to $212 billion in March, while overall imports nudged up 1.1%to $262 billion.

While the overall deficit widened in March, it is still below the 10-year high of $59.9 billion in December.

In other economic news, the Labor Department reported Thursday that U.S. wholesale prices edged up 0.2% in April on rising energy costs.

The producer price index, which measures costs before goods reach consumers, increased 2.2% compared with a year earlier, matching 12-month gain seen in March.

Not counting the always volatile food and energy categories, core wholesale prices rose 0.4% last month. 

With low inflation pressure, Federal Reserve Chairman Jerome Powell has said the central bank can be “patient” with raising interest rates this year.

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