The US trade deficit with China increased in April, despite the tariffs imposed by President Donald Trump (Mohd RASFAN)

Washington (AFP) – The mammoth US trade deficit shrank in April even as exports saw the biggest dive in more than four years, the Commerce Department reported Thursday, which points to weakening momentum in the US economy.

The narrowing trade gap could cheer President Donald Trump, who has made cutting America’s trade imbalance a priority, but the deficit in goods trade with China expanded in the latest month, despite the steep tariffs Trump imposed.

The falling deficit comes as economists warn that rising barriers to international commerce threaten to derail the global economy. So far this year, the US trade gap is still two percent higher than the same period in 2018.

The US trade deficit fell 2.1 percent in April to $50.8 billion, seasonally adjusted, largely in line with analysts’ expectations — but the figure was only a decrease after a sharp upward revision to the March data.

Exports declined by $4.6 billion to $206.8 billion, the largest drop since January 2015. 

But imports fell faster, dropping $5.7 billion, the largest dip in three months.

The trade deficit with China jumped 7.6 percent for the month but was still down 10.8 percent for the year amid the escalation of a year-long trade war.

Meanwhile the deficit with Mexico fell 0.6 percent to $7.9 billion for the month, helping reverse part of this year’s sharp increase. Trump has threatened steep tariffs on all Mexican goods as he demands help stemming the flow of migrants from Central America.

The exports slump was broad-based: autos and parts, medicines, and a $2.3 billion drop in civilian aircraft, likely reflecting the suspension of deliveries for a top-selling Boeing jet grounded after two deadly crashes.

Exports of capital goods were at their lowest since October 2017, while travel services as well as maintenance and repair also dipped.

Meanwhile, American demand for capital goods like civilian aircraft engines and microchips fell to their lowest level in 16 months.

The United States also imported fewer autos and auto parts, organic chemicals and gemstones and bought less natural gas and wood pulp.

Falling imports in the first quarter helped lift US GDP  but economists caution that it points to a slowdown in underlying economic activity.

Still, April’s shrinking gap between exports and imports could support growth in the second quarter.

Disclaimer: Validity of the above story is for 7 Days from original date of publishing. Source: AFP.