Published: Wed, February 05, 2020
Markets | By Otis Pena

US trade deficit falls for 1st time in 6 years

US trade deficit falls for 1st time in 6 years

His comments marked the first time a Trump administration official has said that the fast-spreading virus would hamper China's ability to increase purchases of U.S. goods and services by US$200 billion (S$274 billion) over two years, at least in the near term.

Clete Willems, a former White House trade adviser who took an active role in the US-China negotiations, said China's short-term focus should be on defeating the virus, and the United States would need to show some understanding. Trump has imposed USA $ 360 billion in tariffs on Chinese imports in a fight for Beijing's aggressive urge to question American technological dominance. Last year, Brazil's trade surplus was US$ 46.7 billion.

China was the third largest US goods trading partner in 2019 through November, falling behind Mexico and Canada because of the US-China tariff war.

The Phase 1 agreement, signed on January 15 and taking effect on February 15, suspended a new round of U.S. tariffs in exchange for the Chinese purchases of agricultural, energy and manufactured goods and services.

And while that was the goal of Trump's trade policy, it is not necessarily good news because a drop in exports often reflects a slowing economy.

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Data for November was revised to show the gap tightening to $43.7 billion instead of $43.1 billion as previously reported.

Goods imports were boosted by a US$1.7 billion increase in crude oil imports, which contributed to a US$4.0 billion jump in imports of industrial supplies and materials. This may prompt the Trump administration to step up its efforts to get European countries to have a more reciprocal trade relationship with the U.S. At $17.1 billion, petroleum exports in December were the highest on record. The economy grew at a 2.1% annualized rate in the fourth quarter, matching the pace notched in the July-September period. "[Tariffs] increase costs for consumers, they make us less competitive [and] they take away money from shoe companies and retailers that could be invested in other capital investments".

In December, goods imports surged 3.2% to a seven-month high of $207.5 billion, after declining for three straight months.

Economists believe a 15% tariff on US$110 billion worth of Chinese goods that came into effect on Sept 1 had weighed on imports in the prior months.

The "Phase 1" contract maintains tariffs that have already been introduced for Chinese products worth hundreds of billions of U.S. dollars - and these charges will remain until a "Phase 2" contract is reached. Crude oil imports fell 19.3% to $ 126.6 billion. USA exports fell 0.1% to $2.5 trillion.

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