The U.S. trade deficit narrowed in April to $68.9 billion as an improving global economy boosted sales of American exports
WASHINGTON — The U.S. trade deficit narrowed in April to $68.9 billion as an improving global economy boosted sales of American exports.
The April deficit, the gap between what America buys from abroad and what it sells to other countries, was down 8.2% from a record March deficit of $75 billion, the Commerce Department reported Tuesday.
The improving economic situation overseas drove up demand for American goods while domestic demand for imports slowed.
In April, exports of U.S. goods and services rose 1.1% to $205 billion while imports declined 1.4% to $273.9 billion. Part of the boost in exports came from a $1.4 billion increase in sales of civilian aircraft, a positive sign that a rebound in air travel from depressed pandemic levels is prompting stronger sales of jetliners.
The drop in imports reflected a $1.1 billion decline in purchases of foreign-made autos and auto parts.
The politically sensitive deficit with China fell to $25.8 billion in April, down 6.7% from the March imbalance. But through the first four months of this year, the deficit with China, the largest the United States runs with any country, was up 37.1% over the same period a year ago.
The deficit in just goods in April totaled $86.7 billion while the surplus in services totaled $17.8 billion. The United States runs surpluses in services trade which help lower the goods deficit. However, the services economy, which includes travel payments such as airline fares, has been hit hard by the coronavirus with the service surplus down 16.2% so far this year compared to the same period a year ago.
While many economists are forecasting that the trade deficit will continue to drop in coming months, some analysts are worried that the recovering U.S. economy will continue to favor foreign-made products.
But Michael Pearce, senior U.S. economist, said he believed trade would provide a slight boost to overall economic growth in the current April-June quarter, helped by an improving performance of U.S. exports. That would be an improvement from the big drag to economic growth from trade in the first quarter.
But Trump’s efforts failed to alter the trade imbalances. So far, the Biden administration has left most of the penalty tariffs in place as his administration works to determine the approach it will take to trade.