The US trade deficit grew slightly in March by 1.5% to $50.4 billion, and the trade gap with China sunk to the lowest level in three years due to sinking imports in an ongoing trade war between Washington and Beijing.
Key Takeaways
- Imports rose to 1.1% to $262 billion, led by the categories of oil, food, and industrial supplies. German imports hit a record high.
- Exports rose by 1% to $212 billion with shipments of fuel and soybeans increasing. Much of these imported goods went to China as per ongoing negotiations.
- US imports of cell phones, consumer electronics, and household goods declined. These goods typically come from China, but are also typically volatile.
Commercial aircraft exports dropped, coinciding with the month of the fatal crash which led to the Boeing Max 737 to be banned from the airspace of multiple nations. Trade ties with China are still turbulent as the trade war continues, with the US gap in goods with China hitting a three-year low after seasonal adjustments.
The trade deficit now stands at $50 billion, up 1.5% and down from Q1 2018’s reading of $156.3 billion. The Chinese trade deficit is also down annually, $13 billion less than last year.
Despite decades of trade deficits, the US economy remains the world’s largest. The narrowing trade deficit seen in Q1 helped boost GDP to 3.2%, but this is unlikely to repeat itself for Q2.
US #trade deficit widened $0.7bn to $50bn in Mar as imports (+1.1%) outpaced exports (+1.0%).
Exports driven by food (#soybean) & industrial products (nat gas & fuel) while lower aircraft limit gains.
Imports driven by food, crude #oil, computers while cell phones reduce gains pic.twitter.com/LHVCbqMrLE
— Gregory Daco (@GregDaco) May 9, 2019
Market Reaction
Gold prices have ticked downward following the news that the trade deficit has widened, along with the report that inflation pressure is tamer than expected. Spot gold last traded at $1,281.20/oz, down -0.18% with a high of $1,285.44/oz and a low of $1,279.75/oz.
Gold Price Chart
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