April US trade deficit falls 2.1% to $50.8 billion

The US trade deficit fell in April before the escalation of tariff wars with China and Mexico.

The US trade deficit decreased from $51.9 billion in March to $50.8 billion in April, according to data from the US Department of Commerce. That number matches financial analysts’ expectations.

US trade deficit:key figures

Imports $257.6 billion
Exports $206.8 billion

Exports and imports both decline in April

Imports decreased by 2.2% to $257.6 billion as the US imported fewer cars and smartphones. Exports also dropped by 2.2% to $206.8 billion because the US exported less commercial aircraft, vehicles, and pharmaceuticals.

The US-China trade deficit climbed 29.7% to $26.9 billion in April. That trade imbalance grew before the US-China tariff war escalated in May.

What do economists say about the US trade deficit?

Stephen Stanley, chief economist of Amherst Pierpont Securities, believes that US exports of commercial aircraft plummeted because of the aftermath of two fatal Boeing 737 MAX plane crashes.

‘Half of the export drop reflected civilian aircraft, as Boeing is struggling with the 737 MAX issues,’ said Stanley.

Gregory Daco, chief US economist at Oxford Economics, said the latest US trade data are a pessimistic sign that import growth will slow because of the waning benefits of tax cuts passed in 2017.

‘Leading indicators suggest import growth is unlikely to accelerate, especially as the dampening effects of fading fiscal stimulus and cooling domestic activity offset the improved purchasing power of a stronger dollar,’ said Daco.

How would US tariffs on imports affect the trade deficit?

The US-Mexico trade deficit in April was $8.2 billion. Economist, Joel Naroff, predicts that the trade deficit between the nations could worsen in the future if US President, Donald Trump, imposes tariffs on Mexican goods. He also believes that US tariffs on Mexican and Chinese goods would negatively impact the US economy.

‘The [US] President [Donald Trump] seems intent on imposing them [duties on Mexican goods]. That would mean we would be fighting a two-front trade war and, if that lasts long, it is almost certainly going to sap the energy out of both consumers and businesses', said Naroff.

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