Published: Fri, March 29, 2019
Markets | By Otis Pena

U.S. trade deficit drops as imports from China fall

U.S. trade deficit drops as imports from China fall

Levies on Chinese goods had been set to increase on January 1 before Trump put them on hold while trying to work out an accord with China over the trade war, while the Lunar New Year holiday also tends to cause swings in the figures early in the calendar year.

Export growth, however, continues to be constrained by slowing global demand and the dollar's strength a year ago, which is making US -made goods less competitive on foreign markets.

Analysts are also questioning whether the deficit can continue to trend lower because the slowing global economy and the stronger dollar may have impacted demand for USA goods.

The deficit decreased to 20.6 billion US dollars last month, down from 22.8 billion dollars in January, the State Administration of Foreign Exchange (SAFE) said in a statement.

Data for December was revised down to show the trade gap widening to $59.8 instead of the previously reported $59.9-B.

Economists had expected a deficit of $3.5 billion for January, according to Thomson Reuters Eikon.

And the deficit in goods alone with China - the primary foe in Trump's trade wars - fell by US$5.5 billion in the month to US$33.2 billion, according to the report, nearly entirely due to declining imports from that country.

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Crude oil imports dropped by $1.4 billion, reflecting both lower volumes and prices.

The average goods and services deficit decreased $1.8 billion to $53.9 billion for the three months ending in January.

Washington a year ago imposed tariffs on $250 billion worth of goods imported from China, with Beijing hitting back with duties on $110 billion worth of American products, including soybeans and other commodities.

The US trade deficit decreasing is a win for US President, Donald Trump, who said that he would reduce the goods imbalance while in office.

Imports of services decreased $0.3 billion to $47.8 billion in January. And imports rose 1.1 percent to $19.4 billion, surpassing the previous month´s record. And in January, U.S. soybean exports overall shot up to $1.2 billion from $299 million in December.

The deficit in goods and services narrowed to US$51.1 billion, the Commerce Department said Wednesday, smaller than the median estimate of economists. The cost of imported oil fell as domestic production of the commodity has increased. This month, the Organization for Economic Cooperation and Development cut its 2019 global growth forecast to 3.3 percent from 3.5 percent, China lowered its growth target, and the European Central Bank slashed its projection for the region. Even so, crude export prices remained 40.1 percent below their July peak. However, this news was offset by a drop in overall exports to China. There were, however, increases in imports of consumer goods, as well as motor vehicles and parts in January.

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