Tensions unlikely to ease as US trade deficit narrows

Hope Soto
May 5, 2018

Although not close to the "One Billion Dollar reduction" in China's "massive Trade Deficit with the United States" Trump tweeted about in March, the deficit in March was $26 billion - 11.6 percent less than the monthly deficit for February.

Canada's trade deficit hit a record 4.14 billion Canadian dollars (about 3.21 billion US dollars) in March as imports increased more than exports, Statistics Canada said on Thursday.

The Commerce Department said the trade deficit tumbled 15.2 percent to $49.0 billion in March, the lowest level since September.

America and China are engaged in a tit-for-tat dispute over import tariffs, which has sparked volatility in markets since the scrap began in March.

Exports rose in March to a record $208.5 billion, led by shipments of civilian aircraft and soybeans. He recently slapped 25 percent import duties on steel and 10 percent on aluminum.

The president views trade deficits as a sign of economic weakness that can be brought down by more aggressive trade policies. Canada sent 73.4 percent of all goods exports to the United States in March. Growth in US oil exports and a decline of oil imports since 2011 have masked the deterioration of the non-oil trade deficit.

A second report from the Labor Department showed hourly worker compensation accelerated at a 3.4 percent rate in the first quarter after rising at a 2.4 percent pace in the October-December period. There were also increases in exports of soybeans, corn and crude oil.

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Meanwhile, gains in imports of computer equipment (up 13 per cent), medium and heavy vehicles (up 9 per cent), and industrial machinery and equipment (up 3 per cent) suggested a solid pick-up in business investment.

The United States ran a $20.5 billion surplus in the trade of services such as education and banking.

Canadian imports climbed six per cent to $51.7 billion in March due to the motor vehicles and parts sector as well as consumer goods.

However, the government statistical agency noted higher than usual import levels of light trucks, as well as increased imports of clothing, footwear and accessories, and pharmaceutical and medicinal products.

The import side showed encouraging consumer demand, with passenger vehicles and light trucks up 13 per cent month over month, and consumer products up almost 8 per cent. Economists said the strength reflects Canada's continued strong labour market, as well as the acceleration in wage growth in recent months.

Orders for these so-called core capital goods rose 1.0 percent in February.

Other reports by MaliBehiribAe

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