US Trade Deficit Narrows as Chinese Imports Fall

(CN) – The U.S. trade gap dropped nearly $2 billion in February to the lowest level in eight months, driven by a sharp decrease in the closely watched deficit with China amid an ongoing trade war.

The gap between the number of goods and services the United States sells and buys from other countries fell 3.4% percent to $49.4 billion in February, compared to $51.1 billion the month before.

Economists had predicted a trade deficit of about $53 billion. The decline marks the lowest gap since last June.   

The goods deficit with China dropped to $24.8 billion, a 28.2% decrease.

American imports from China fell 20.2% percent to $33.2 billion, while exports to China spiked 18.2% to $8.4 billion, according to a Commerce Department report released Wednesday.

Exports to all countries increased by 1.1 percent to $209.7 billion in February, while overall imports nudged up 0.2 percent to $259.1 billion.

Closing the trade gap with China has been a top priority for the Trump administration, which has levied tariffs against imports from China such as cars and cellphones, as well as steel and aluminum from Canada, Mexico and the European Union.

President Donald Trump has vowed since the 2016 campaign to lower the trade deficit, saying the gap is the result of bad trade deals by past administrations. It hit a 10-year high of $59.9 billion in December.

Negotiators from America and China are still trying to iron out the ongoing trade dispute.

Ted Bauman, economist and senior research analyst at Banyan Hill Publishing, said in a statement that the latest trade deficit numbers are good news for the Trump administration.

“It demonstrates that the United States has leverage in the ongoing trade talks between the two countries. China's government relies on strong economic growth to satisfy its population, which has little democratic input into the governance of the country,” Bauman said. “This creates an opportunity for U.S. negotiators.”

He added, “The longer the trade talks drag on, the more China's government will rely on domestic economic activity to compensate for U.S. tariffs. But as Chinese imports rise and exports fall, China's net income from trade with the U.S. deteriorates…The upshot is that the February trade figures are likely to impel China to reach a deal more quickly than they would have otherwise.”

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Email *

Submit