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US trade gap up nearly 8% in first half

By IANS | Updated: August 3, 2019 05:55 IST

US' trade deficit edged down 0.3 per cent in June to $55.2 billion, but the year-to-date accumulated goods and services shortfall was up 7.9 per cent amid President Donald Trump's ongoing trade war with China.

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The June figure from the Commerce Department, released on Friday, slightly exceeded the forecasts of economists, who had anticipated a $54.4 billion deficit, the Efe news reported.

Exports fell 2.1 per cent in June to $206.3 billion, while imports declined by 1.7 per cent relative to May, coming in at $261.5 billion.

The drop in both indicators reflects both a slowdown in US economic growth in the second quarter and weaker foreign demand.

The accumulated trade deficit for the year's first six months, however, widened by 7.9 per cent compared to January-June 2018.

The deficit with China, a politically sensitive issue due to Trump's trade war with the Asian giant, declined by 0.8 per cent in June to roughly $30 billion.

But the US's trade deficit with Mexico rose to a record high of $9.8 billion.

The US's trade gap with its southern neighbour for the first six months of the year was 34 per cent higher than in January-June 2018, while the deficit with China fell by 10 per cent.

The Commerce Department's latest report was released a day after Trump ratcheted up his trade war with Beijing by threatening new 10 per cent tariffs starting September 1 on $300 billion worth of Chinese imports. Those levies are in addition to tariffs already imposed on $250 billion in Chinese imports.

Trump took office with a promise to reduce the US's massive trade deficits, but he has been unable to deliver on that pledge in two and a half years in the White House, with the trade gap ending 2018 at its highest level in a decade.

Many economists, however, say that indicator is a poor gauge of a country's economic health, tending to rise when consumers spend more on imported goods during economic upswings.

The slight drop in the trade deficit in June coincides with a US economic slowdown in recent months.

The US economy decelerated in the second quarter, with GDP growing at a clip of 2.1 per cent between April and June after expanding 3.1 per cent in the first quarter.

In its latest quarterly World Economic Outlook report, the International Monetary Fund lowered its projection for 2019 global GDP growth to 3.2 per cent, down one-tenth of a percentage point from April, citing trade tensions between Washington and Beijing.

( With inputs from IANS )

Tags: ustrumpCommerce Departmentchinabeijing
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