The U.S. trade deficit sank almost 10% in February, aided by an increase in exports to a 26-month high and a plunge in imports of autos, cellphones and other consumer goods.
The deficit fell to $43.6 billion in February, more than canceling out a big increase in January that raised the nation’s trade gap to a five-year high of $48.2 billion. Figures are seasonally adjusted.
The ups and downs in the deficit in the first two months of the year largely stem from the timing of the Chinese lunar new year. Imports from China tend to surge before the prolonged holiday period and subside afterward.
At the same time, though, U.S. exports rose for the third month in a row and are nearly 7% higher compared to a year ago. U.S. exports rose 0.2% to $192.9 billion — the most since December 2014.
U.S. exporters have been helped by an improvement in the global economy as well as a softening in the value of the dollar, making American goods somewhat less expensive to buy. A strong dollar had crimped U.S. exports from late 2015 to the middle of 2016.
A lower trade deficit is a boost to the economy. The decline in February reverses the drag from January on gross domestic product in the first quarter.
In recent action on Wall Street, the Dow Jones Industrial Average
declined. The dollar
weakened vs. the yen but rose against other major currencies.
Imports, meanwhile, declined 1.8% in February to $236.4 billion. The U.S. imported fewer cellphones from China and South Korea and fewer autos and parts from Europe.
Despite the decline in February, the U.S. trade deficit is running 3.2% higher through the first two months of 2017 compared with the same period in 2016.
The Trump administration has promised to reduce the deficit through tougher negotiations with trading partners. One of the president’s key architects on trade policy has argued that high trade deficit poses large risks economically and undermines national security.
Yet even if the White House has some success, it’s unlikely to show up in the trade report for quite some time. The U.S. ran a trade deficit of $500.6 billion in 2016 and an even larger $750 billion in goods.
Nearly 70% of the U.S. trade deficit is with one country: China. Later this week, Trump is slated to meet with the president of China in Florida to discuss trade, North Korea and other major issues.
The president said he expects the talks to be “difficult.”