US trade deficit shrinks in July

Goods exports increase 0.9%; imports slip 0.2%

WASHINGTON, Sept 4, (RTRS): The US trade deficit narrowed slightly in July, but the gap with China, a focus of the Trump administration’s “America First” agenda, surged to a six-month high.

The report from the Commerce Department on Wednesday came against the backdrop of an escalation in the trade war between the United States and China. The two economic giants slapped fresh tariffs on each other on Sunday, fanning fears of a global recession. President Donald Trump on Tuesday warned he would be “tougher” on Beijing in a second term if trade talks dragged on.

The Commerce Department said the trade deficit dropped 2.7% to $54.0 billion as exports rebounded and imports fell. Data for June was revised down to show the trade gap shrinking to $55.5 billion instead of the previously reported $55.2 billion.

Economists polled by Reuters had forecast the trade gap narrowing to $53.5 billion in July.

The politically sensitive goods trade deficit with China increased 9.4% to $32.8 billion, with imports jumping 6.4%. Exports to China fell 3.3% in July. The goods trade deficit with the European Union jumped to a record high, with the shortfall with Germany the largest since August 2015.

Washington imposed 15% tariffs on more than $125 billion in Chinese imports, including smart speakers, Bluetooth headphones and clothing. In retaliation, China slapped additional duties on some of the US goods on a $75 billion target list, including a 5% tariff on crude oil. Additional tariffs are due in December.

The trade tensions have rattled financial markets and triggered a global manufacturing recession.

US financial markets were moved by the trade data.

In July, goods exports increased 0.9% to $138.2 billion. But with China imposing additional tariffs on US soybeans, beef and pork, exports are likely to decline in the months ahead. China’s commerce ministry said in early August that Chinese companies had stopped buying US farm products.

A survey of manufacturers on Tuesday showed a measure of export orders received by factories plummeted in August to the lowest level since April 2009.

In July, exports were boosted by consumer goods, which increased $1.5 billion. Capital goods exports rose $0.8 billion. There were also increases in exports of motor vehicles. Exports of industrial supplies and materials, however, decreased $1.7 billion, with shipments of crude oil falling $0.5 billion.

Goods imports dropped 0.2% to $211.8 billion. Economists believe imports rebounded in August as businesses probably stocked up on Chinese goods following the announcement of further tariffs.

The US-China trade tensions have caused wild swings in the trade deficit, with exporters and importers trying to stay ahead of the tariff fight between the two economic giants.

The import bill was pulled down by a $1.5 billion decline in capital goods imports.

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little In this file photo, large cranes to unload container ships are shown at Port Miami in Miami. On Sept 4, the Commerce Department reports on the US trade

gap for July. (AP)