U.S. trade deficit narrows slightly as exports rise
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[September 04, 2019]
WASHINGTON (Reuters) - The U.S. trade
deficit narrowed slightly in July as exports rebounded, but the gap with
China, a focus of the Trump administration's "America First" agenda,
surged to a six-month high.
The Commerce Department said on Wednesday the trade deficit dropped 2.7%
to $54.0 billion. 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.
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The United States and China slapped fresh tariffs on each other on
Sunday, ratcheting up a tit-for-tat trade war that has rattled financial
markets and triggered a global manufacturing recession. President Donald
Trump on Tuesday warned he would be "tougher" on Beijing in a second
term if trade talks dragged on.
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 U.S. goods
on a $75 billion target list, including a 5% tariff on crude oil.
Additional tariffs are due in December.
In July, goods exports increased 0.9% to $138.2 billion. But with China
imposing additional tariffs on U.S. 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 U.S. 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. But exports of industrial
supplies and materials decreased $1.7 billion, with shipments of crude
oil falling $0.5 billion.
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Shipping containers are seen at the Port Newark Container Terminal
in Newark, New Jersey, U.S. on July 2, 2009. REUTERS/Mike Segar/File
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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 U.S.-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. The drop in capital goods imports suggests business investment could
remain weak in the third quarter after contracting in the April-June period for
the first time in three years.
But imports of industrial supplies and materials rose $0.9 billion, with
petroleum products imports increasing $1.0 billion.
When adjusted for inflation, the goods trade deficit fell $0.7 billion to $85.5
billion in July. The so-called real trade deficit is slightly above the
second-quarter average, suggesting trade could again weigh on gross domestic
product this quarter.
Trade subtracted 0.72 percentage point from GDP in the second quarter. The
economy grew at a 2.0% annualized rate in the last quarter, slowing from the
first quarter's brisk 3.1% rate. The Atlanta Federal Reserve is forecasting the
economy growing at a 1.7% pace in the third quarter.
In July, the services surplus decreased $0.1 billion to $19.7 billion, the
lowest level since February 2016, as imports of services hit a record high.
(Reporting By Lucia Mutikani; Editing by Andrea Ricci)
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