The U.S. trade deficit narrowed in March to the lowest level since October as both exports and imports fell, but the trade gap with China and Mexico rose, according to data released Thursday.
Paul Wiseman of the Associated Press had the news:
The Commerce Department said Thursday that the gap in goods and services slipped to $43.7 billion, down from $43.8 billion in February. Exports dropped 0.9 percent to $191 billion, pulled down by falling auto exports. Imports fell 0.7 percent $234.7 billion as imports of crude oil and other petroleum products slid.
President Donald Trump was elected on a pledge to reduce America’s trade deficits, which he blames on unfair trade practices by China and other countries. The president says trade deficits are responsible for the loss of hundreds of factories and millions of manufacturing jobs.
So far this year, the trade deficit is up more than 7 percent to $135.6 billion. For all of last year, the gap exceeded $500 billion.
The trade deficit in goods with China rose 7 percent to $24.6 billion in March from $23 billion in February on rising imports of Chinese cellphones and telecommunications equipment.
Jeffrey Bartash of MarketWatch.com reported that the deficit with Mexico reached the highest level in nearly a decade:
The Trump administration has made slashing the trade deficit one of its priorities, particularly the large gaps with China and Mexico. Yet these deficits are the byproduct of major economic changes in the U.S. and its trading partners over a long period that won’t be eradicated easily or quickly.
The trade gap with Mexico in goods climbed 22% to $7 billion in March as imports of set a record. That’s the biggest deficit with the southern neighbor since November 2007, a month before the start of the Great Recession.
The U.S. trade deficit in goods with Japan, meanwhile, leaped 55% to $7.2 billion to mark the highest level since April 2008.
Mexico and Japan are both big suppliers to the U.S. of autos and parts, whose imports soared in March.
Pan Kwan Yuk of the Financial Times reported that the collapse of the Mexican peso caused the increase:
The trade gap in goods with Mexico stood at $7.03bn in March, a 30 per cent jump compared to the year-ago period and the highest level since October 2017.
The rise comes as the peso suffered a 17 per cent collapse in value against the greenback last year. Despite rallying more than 9 per cent since the start of the year, the peso, which is currently trading at around the 19 per dollar mark, remains some ways off from the 13 per dollar level it was trading at in 2014.
While the March trade deficit is the biggest deficit ever recorded for that month and the third worst month ever since records began in 1985, it should be noted that the data are not seasonally adjusted and do not take into account of inflation.
Still, the latest trade reading is likely to be seized upon by the Trump administration as ammunition ahead of its talks to renegotiate the two-decade-old North American Free Trade Agreement with Mexico and Canada.