US trade deficit widens in April

The US trade gap widened in April for the second straight month as Americans bought more imported consumer goods, the Commerce Department reported today.

Despite falling oil imports and crude prices, the US trade deficit saw its biggest jump in three months, increasing 5.2 percent or $2.3 billion compared to March to $46.7 billion.

The consecutive increases in the deficit come as the Trump administration presses ahead with a nationalist trade agenda, making the elimination of bilateral trade deficits a central goal of economic policy.

President Donald Trump this week made the US trade deficit with Germany a bone of contention and the administration is reviewing trade agreements with an eye to correcting imbalances, including renegotiating the landmark North American Free Trade Agreement.
 

The trade deficit with Germany in goods alone was $5.5 billion in April, while the goods and services deficit for the first quarter totaled $17.2 billion.

In addition to the increased deficit in April, the Commerce Department also revised the March trade deficit up by $1.6 billion. For the first four months of the year, the deficit increased $22.1 billion or 13.4 percent from the same period of 2016.

Imports in April rose $1.9 billion to $238.6 billion, with imports of capital goods seeing their biggest increase since April 2015 at $51.5 billion, and food and beverage imports at their highest ever at $11.5 billion.

And exports fell marginally to $191 billion, with US sales to foreign markets of consumer goods hitting their lowest level in 11 months at $15.7 billion.

Exports to South Korea were the highest on record at $4.4 billion, while exports to Japan were near a three-year high at $6 billion.

The widening trade gap caused analysts to knock down their forecasts for economic expansion in the second quarter.

"If sustained in May/June, the April level would result in net exports subtracting about 0.5 points from the real GDP growth rate" for the second quarter, Jim O'Sullivan of High Frequency Economics said in a client note.

In light of the new trade figures, HFE is now forecasting three percent GDP growth in the April-June period while the tracking estimate at Barclays stands at two percent.