ZCZC
BCN-07
US-TRADE-DEFICIT-INDICATOR
US trade deficit hits 5-month high as imports from Mexico soar
WASHINGTON, July 4, 2019 (BSS/AFP) – America’s politically-sensitive trade
deficit jumped to a five-month high in May as imports of automobiles rose to
their highest on record, according to government data released Wednesday.
The trade deficit with Mexico, a country President Donald Trump threatened
with stinging tariffs, rose to its highest in a decade, according to the
Commerce Department report.
Financial markets in May were whipsawed by the shifting uncertainties of
Trump’s trade wars, and fears of the impact of more tariffs on the US
economy.
The May data should prove frustrating for the president, who has made
eliminating the deficit a signature goal of his administration, saying it is
a sign other countries are stealing from the United States.
Trump on Wednesday lobbed some of his frequently-made accusations at China
and Europe, accusing them of driving down the value of their currencies to
remain competitive.
The US trade gap jumped 8.4 percent to $55.5 billion, seasonally adjusted,
well above analyst forecasts.
That surge combined with the April trade gap, which was revised higher
than originally reported, could weigh on growth forecasts for the second
quarter.
May was another challenging month for global trade, as Trump threatened to
stifle commerce with major partners: Trade talks with China nearly collapsed,
and Trump threatened to impose duties on all Chinese imports — and on all
goods from Mexico in a dispute over migrants at the southern border.
– Reorienting trade –
Those dangers have receded for the moment following truces with Beijing
and Mexico City, but while those positive turns remained uncertain importers
may have rushed in to lock in lower prices and rebuild inventories.
“China and Europe playing big currency manipulation game and pumping money
into their system in order to compete with USA,” Trump said on Twitter.
MORE/HR/0928
ZCZC
BCN-08
US-TRADE-DEFICIT-INDICATOR 2 LAST WASHINGTON
Trump also implied that the Federal Reserve should likewise ease monetary
policy, something he has called for in the past.
The US Treasury, however, again reported in May that China was not
manipulating its currency and departing European Central Bank Chief Mario
Draghi last month rejected similar accusations from Trump, saying the ECB
does not target the exchange rate.
Imports of goods and services rose 3.3 percent to $266.2 billion in the
latest month, the largest jump in more than four years as Americans bought
more passenger cars, crude oil, semiconductors and consumer items, the report
said.
Economists John Ryding and Conrad DeQuadros of RDQ Economics question
whether the trade will impact US growth in the April-June quarter.
“It is not trade that is subtracting from growth but domestic supply
constraints that are holding back growth,” they said in an analysis. “Imports
have surged over the last three months but these imports are vital for
domestic production.”
However forecasters Macroeconomic Advisors trimmed their second-quarter
GDP forecast by a tenth of a point to two percent as a result of the May
data.
At $33.2 billion, imports of autos and parts were the most on record. US
exports also rose but by a slower two percent, although consumer goods were
the highest on record at $18.1 billion.
The report also showed the extent to which trade relations were
reorienting themselves as Trump pursued his aggressive trade strategy.
In the first five months of the year, the trade deficit has risen 6.4
percent to $261.4 billion compared to the same period in 2018.
But it has fallen 10.5 percent with China, which has traditionally been
the largest feeder of America’s import splurges.
The deficit with Mexico has increased 35 percent to $40.4 billion, and in
May hit $9 billion, the highest since seasonally adjusted records began in
2009.
With the European Union, the US deficit was up 7.3 percent to $72.3
billion so far this year.
Trump and Chinese counterpart Xi Jinping last weekend agreed to resume
negotiations toward resolving their year-long trade war, in which both sides
so far have slapped tariffs on more than $$360 billion in two-way trade.
But Trump withdrew a threat to impose duties on another $300 billion in
imports from China.
BSS/AFP/HR/0925