U.S. Trade Deficit Unexpectedly Narrowed in February

President Donald Trump, pictured August 21, 2018, has pushed aggressive trade actions to lower the US trade deficit, but US trading partners have retaliated

The U.S. trade deficit narrowed in February, likely giving a major boost to first-quarter gross domestic product.

The trade deficit goods and services contracted 3.4% to a seasonally adjusted $49.38 billion, the Commerce Department said Wednesday. Economists had expected the trade deficit to expand to $53.6 billion from January’s $51.1 billion.

The trade gap narrowed because exports increased faster than imports in February. Exports rose 1.1 percent while imports increased 0.2 percent.

Exports of civilian aircraft, an often volatile category, rose $2.2 billion in the month. Auto exports rose $0.6 billion. Consumer goods exports rose as well.

Exports of services, always a strength in these trade reports, rose 0.3 percent to $70.1 billion.

The trade gap in goods with China shrank 9.3% from the prior month to a seasonally adjusted $30.12 billion, as the U.S. exports rose and imports declined compared with the prior month.  This is likely evidence that the threat of tariffs rising caused a rush of imports in December and January.

Soybean exports jumped 15.6% in February. That likely reflects China returning to the U.S. market.

Year to date, the trade gap with China is $59.2 billion, down significantly from the $65.2 billion deficit in the first two months of last year.

The deficit with both the European Union and Canada narrowed in February. The deficit with Japan and Mexico expanded.


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