The U.S. trade deficit narrowed for the second straight month in April, shrinking 2.1 percent to $46.2 billion as exports surged and imports continued to falter, according to the most recent data from the U.S. Department of Commerce’s Bureau of Economic Analysis.
Following a revised 18.2 percent drop in March that was preceded by six straight months of growth, the April deficit in goods and services was the lowest since September 2017.
U.S. exports reached $211.2 billion for the month, ticking up 0.3 percent from March, while the nation’s imports slipped 0.2 percent to $257.4 billion.
Prior to the March revision, which pegged the trade deficit at $47.2 billion rather than $49 billion as previously reported, economists polled by Reuters had projected the trade deficit to remain unchanged at $49 billion in April.
The three-month moving average of the goods and services deficit has now fallen 4.3 percent to $49.6 billion for the three months ending in April, with average exports increasing 1.4 percent to $209.3 billion and average imports up 0.3 percent to $259.0 billion.
On a year-over-year basis, however, the three-month average goods and services deficit is still up 11 percent from the same 2017 period, as exports and imports have increased $17 billion (8.8 percent) and $21.9 billion (9.2 percent), respectively.
The U.S. deficit with China decreased 9.9 percent to $30.8 billion in April compared with the previous month amid continued bilateral trade talks between the two nations.
President Donald Trump and his administration in recent weeks have been ramping up pressure on the Chinese government to reduce this trade imbalance by $200 billion by the end of 2020 by purchasing more American goods and services.
Following meetings between delegations led by U.S. Commerce Secretary Wilbur Ross and Chinese State Council Vice Premier Liu He, in Washington, D.C. three weeks ago, Beijing and the White House seemed to be on the same page, issuing a joint statement that said both sides had agreed to take steps to “substantially” reduce the bilateral trade deficit, increase U.S. exports of agriculture and energy and enhance protections for intellectual property.
Talks have come to a bit of a stalemate, however, as the White House last week announced plans to move forward in imposing 25 percent tariffs on approximately $50 billion worth of goods in yearly import value from China, just over one week after putting its tariff proposal on hold while discussions continued.
Beijing quickly responded by threatening to pull out of the negotiations entirely, saying, “All economic and trade outcomes of the talks will not take effect if the U.S. side imposes any trade sanctions, including raising tariffs,” and that any and all trade talks with the United States “should be based on the prerequisite that the two parties meet each other halfway and will not engage in a trade war.”
A potential tariff battle is brewing with the United States’ neighbors and close allies as well.
The Trump administration said last week it would not exempt Canada, Mexico and the European Union from tariffs on imports of steel and aluminum, prompting all three to publish lengthy lists of planned retaliatory tariffs on U.S. exports.