U.S. trade deficit de­clines in May

0.4% in­crease in ex­ports, 0.1% re­duc­tion in im­ports cited in nar­row­ing of gap

Northwest Arkansas Democrat-Gazette - - BUSINESS & FARM - In­for­ma­tion for this ar­ti­cle was con­trib­uted by Paul Wise­man of The As­so­ci­ated Press.

ANA SWANSON

WASH­ING­TON — The U.S. trade deficit nar­rowed in May as a re­bound in global growth in­creased for­eign de­mand for U.S. ex­ports of au­to­mo­biles, con­sumer prod­ucts and other goods and ser­vices to their high­est level in more than two years.

The trade deficit, the gap be­tween U.S. im­ports and ex­ports of goods and ser­vices, fell to $46.5 bil­lion, down $1.1 bil­lion from the pre­vi­ous month, data re­leased Thurs­day morn­ing by the Com­merce Depart­ment showed.

U.S. ex­ports rose 0.4 per­cent to $192 bil­lion, ev­i­dence of a re­bound in global trade, while im­ports de­clined just 0.1 per­cent to $238.5 bil­lion.

“Trade is back,” Chris Rup­key, chief fi­nan­cial econ­o­mist at MUFG Union Bank, wrote in an email to clients.

Yet while the U.S. trade bal­ance fell in May, it is on pace to be larger this year than last. In the first five months of 2017, the trade bal­ance came to $233 bil­lion, com­pared with $206 bil­lion in the first five months of 2016.

Even in some coun­tries whose trade prac­tice Trump has specif­i­cally crit­i­cized, the im­bal­ance con­tin­ues to grow. The U.S. trade deficit with Canada has widened by $7.7 bil­lion this year, while the trade deficit with Mex­ico has grown by $3.8 bil­lion, Fo­tios Rap­tis, an an­a­lyst at TD Eco­nom­ics, said in a note Thurs­day.

Trade deficits with Europe and China have also widened, as a stronger U.S. econ­omy in­creased de­mand for im­ports.

That will likely come as un­wel­come news to the Trump ad­min­is­tra­tion, which has per­sis­tently crit­i­cized the trade deficit as ev­i­dence that other coun­tries are tak­ing ad­van­tage of the United States.

Econ­o­mists gen­er­ally cau­tion against these views, ar­gu­ing that, while a per­sis­tent trade deficit can be a trou­bling sign, trade bal­ances can fluc­tu­ate for all kinds of rea­sons, in­clud­ing the value

● of rel­a­tive cur­ren­cies, the strength of economies and in­ter­na­tional in­vest­ment flows. For ex­am­ple, im­ports some­times rise when the U.S. econ­omy is do­ing well

and Amer­i­cans can bet­ter af­ford prod­ucts from abroad. A strong U.S. econ­omy also tends to push up the value of the U.S. dol­lar, caus­ing ex­ports to fall.

Pres­i­dent Don­ald Trump is­sued an ex­ec­u­tive or­der on March 31 call­ing for the Com­merce Depart­ment to pre­pare

a re­port within 90 days on the bi­lat­eral trade deficits the United States main­tains with other coun­tries. That time frame would have called for the re­port to be is­sued by June 29, but it has yet to be re­leased.

The Trump ad­min­is­tra­tion also is pre­par­ing to rene­go­ti­ate the North Amer­i­can Free Trade Agree­ment with Canada and Mex­ico to over­haul a trade pact he has called a “dis­as­ter” for Amer­i­can work­ers.

AP/PA­TRICK SEMANSKY

A ship­ping con­tainer is loaded onto a wait­ing trailer at the Port of Bal­ti­more in this file photo. The trade deficit, the gap be­tween U.S. im­ports and ex­ports of goods and ser­vices, fell to $46.5 bil­lion in May, the Com­merce Depart­ment said Thurs­day.

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