America’s yawning deficit on trade in goods narrowed slightly in April, new figures have shown.
As President Donald Trump fired the first shots in a trade war with the outside world, slapping tariffs on steel and aluminium, the US Census Bureau reported that the goods deficit in April stood at $68.2 billion, down $400 million, or 0.6%, on the $68.6 billion seen in March.
Tensions escalate in world commerce
Inventories, the growth or decline of which can be important indicators of the direction of the economy, were positive. Advance wholesale inventories were up slightly in April compared with March, at $629.4 billion from $629.2 billion, a rise of 0.03%.
Compared with April 2017, they were up 5.6%, against an annual rise of 3.9% in March.
Advance retail inventories rose 0.6% in April compared with March, to $633.5 billion from $630 billion, and were 2.5% higher than in April 2017, against an annual rise of 1.6% in March.
America’s trade deficit is of long standing and is made possible, in part, by the reserve currency status of the dollar.
The marginally better trade numbers come against a background of escalating tensions in world commerce. On 29 May, the White House carried out a long-standing threat to put tariffs on imported steel and aluminium from China, the European Union, Canada and Mexico. The Trump tariffs were justified on national security grounds, which gives an opt-out from World Trade Organisation (WTO) rules.
“Protectionism, pure and simple”
But experts say the supposed Trump China tariffs, amounting to 25% on steel and 10% on aluminium, will have little effect on the Asian economic superpower, given what the Financial Times described as the negligible quantity of Chinese steel being exported to the US.
Instead, the EU and America’s two partners in the North Atlantic Free Trade Area (NAFTA), Canada and Mexico, will suffer the full brunt of the tariffs. The EU has made it clear it will retaliate. Jean-Claude Juncker, president of the European Commission, said the EU would proceed with plans to impose duties on a range of US products, including motorcycles and peanut butter.
Mr Juncker added: “This is protectionism, pure and simple. Over the past months we have continuously engaged with the US at all possible levels to jointly address the problem of overcapacity in the steel sector.