U.S. Goods Trade Deficit With China Reaches Five-Month High
(Bloomberg) -- America’s merchandise trade deficit with China widened slightly in June to a five-month high, government figures showed Friday, a day after President Donald Trump threatened to ratchet up tariffs on a slew of additional imports from the Asian nation.
The gap stood at a seasonally adjusted $30.2 billion after $30.1 billion a month earlier, according to the Commerce Department. The value of American exports to China declined more than imports. The overall U.S. shortfall in goods and services trade narrowed by less than forecast, to $55.2 billion in June.
Trump escalated trade tensions with China on Thursday, announcing he would impose a 10% tariff on an additional $300 billion in Chinese imports. The new levies will be imposed beginning Sept. 1, Trump said in a tweet Thursday that broke a tentative trade cease-fire between the world’s two biggest economies. The 25% tariff already imposed on $250 billion in Chinese goods will remain in place, he said.
Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer returned from talks with Chinese counterparts in Shanghai this week without reporting much progress. The sides both said they’d meet again in early September in Washington for the next round of talks.
Negotiations have been at an impasse since May after the U.S. said the Chinese reneged on provisions of a tentative deal.
So far this year, the U.S. merchandise deficit with China has narrowed to a seasonally adjusted $179.8 billion, compared with $200.4 billion in the same six months of 2018. U.S. exports to China are down 18.1% this year, while imports have fallen 12.2%, a reflection of dwindling two-way trade.
The overall trade deficit in June showed a slightly larger decline in the value of imports than exports, capping a quarter in which the shortfall weighed on economic growth. The median estimate of economists surveyed by Bloomberg called for a deficit of $54.6 billion.
The second-quarter trade gap subtracted 0.65 percentage point from the annualized growth pace of gross domestic product during the period. Slower global economies, exacerbated by the U.S.-China trade war, explain why exports of American goods have cooled and why companies are delaying capital expansion plans.
Federal Reserve Chairman Jerome Powell this week cited trade tensions with China as one of the biggest risks to an otherwise resilient U.S. economy. Global growth concerns and uncertainty surrounding trade policy prompted U.S. central bankers to cut interest rates a quarter-point Wednesday.
- After adjusting for inflation, which renders the numbers used to calculate GDP, the goods trade deficit narrowed to $86.1 billion from $86.4 billion in the prior month.
- The real petroleum gap narrowed to an all-time low of $5.7 billion as inflation-adjusted petroleum exports reached a record high of $23.3 billion.
- Exports and imports of goods account for about three-fourths of America’s total trade; the U.S. typically runs a deficit in merchandise trade and a surplus in services.
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