U.S. trade deficit with China shrank to its lowest point in almost three years as imports slowed and
exports increased. President Trump may use these data points as fodder that his tariff war is working, thereby bolstering his position in negotiations.
The merchandise gap narrowed to $28.3 billion in March, according to the Commerce Department. Overall U.S. deficit in goods and services widened to $50 billion. Overall exports increased 1% to $212 billion, boosted by a 39% jump in soybean shipments. Imports climbed 1.1% to $262 billion on gains in oil, food, vehicles and pharmaceuticals. The overall merchandise-trade deficit widened 0.7% to $72.4 billion.
China’s top negotiator is scheduled to arrive in Washington today ahead of the tariff increase on Friday. The narrower trade gap with China obscures a sharp drop in overall trade with the US. Imports from China dropped 13.6% in Q1 compared to a year ago while exports were down 17.6%. For March, exports were the highest since mid-2018 while imports were the lowest since 2016.
Net exports have helped boost U.S. growth, adding a full point to gross domestic product in the first quarter after previously dragging on the expansion. At the same time, exporters have been confronting a dimmer outlook for global growth, while an inventory overhang may weigh on imports.
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