Trade deficit dips to $43.1B

WASHINGTON — The U.S. trade deficit dropped in May to the lowest level in 19 months as U.S. exports rose to a record level. But the trade gap between the United States and China increased sharply, underscoring the economic tensions between the world’s two biggest economies.

The Commerce Department said Friday that the May trade deficit — the difference between what America sells and what it buys in foreign markets — fell 6.6 percent to $43.1 billion. It was the smallest imbalance since October 2016.

Exports climbed1.9 percent to a record $215.3 billion. Imports were up a smaller 0.4 percent to $258.4 billion.

The United States imposed penalty tariffs on $34 billion in Chinese goodsFriday. China retaliated in kind, starting what Beijing called the “biggest trade war in economic history.”

For May, America’s deficit in goods with China rose18.7 percent to $33.2 billion. So far this year the deficit totals $152.2 billion, up 9.9 percent from the same period a year ago.

As has been the case for decades, America’s deficit with China is the largest imbalance with any country.

During the 2016 presidential campaign, President Donald Trump repeatedly attacked America’s trade deficits, contending they were the result of inept U.S. negotiators striking bad deals. He pledged to correct that situation if elected and since taking office he has tried in a number of ways to force China and otherU.S. trading partners to alter trade arrangements to boost U.S. export sales.

Washington imposed 25 percent duties on $34 billion of imports from China in the first in a possible series of increases that Trump says could affect up to $550 billion of Chinese goods. China announced that its retaliatory tariffs had also taken effect.