Trade tensions with China expected to contribute to decline in US trade deficit

Trade tensions with China expected to contribute to decline in US trade deficit

The US Commerce Department publishes trade data for April today, with Washington’s trade deficit with Beijing likely to be the

u-s-commerce-secretary-wilbur-ross-left-chats-chinese-vice-premier-liu-he-during-photograph

Photo: Reuters/Andy Wong

The US Commerce Department publishes trade data for April today, with Washington’s trade deficit with Beijing likely to be the primary focus.

The total US trade deficit for March was $49 billion, a steep fall from some $57 billion in February, which was the highest figure since October 2008. Pundits predict April’s deficit to be marginally less at $48 billion. Although Washington wants its deficit with China to average $15 billion monthly, it will likely also hover around last month’s $26 billion.

The trade gap is thus not shrinking as quickly as President Trump had hoped, despite his imposition of steel and aluminium tariffs in March. Expect Trump to ramp up protectionist tariffs in response, especially on Chinese manufactured and technological goods, if today’s data matches predictions.

Chinese officials, who have engaged in negotiations with US officials this week, said they will not sign any agreements if tariffs are again increased. Additional US tariffs aimed at quickly closing the trade gap with China could therefore mark a point of no return en route to a quickly escalating trade war.

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