U.S. Trade Deficit Rises in February to a Six-Month High Level

06 Apr, 2016

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The U.S. trade deficit widened in February to the highest level in six months high as the growth in imports outpaced a more modest increase in exports.

The trade gap increased to $47.1 billion, up 2.6 percent from a January imbalance of $45.9 billion, the Commerce Department reported Tuesday.

The stronger USD which made U.S.-made goods less competitive in a weaker global market squeeze American manufacturers. As the trade deficit continues widening in three straight months, the number indicates trade will weigh on first-quarter growth.

Trade deficit has become a major issue among presidential candidates, such as Republican Donald Trump and Democrat Bernie Sanders. They blame the deficits on unfair trading actions by countries such as China and Mexico. Some analysts pointed out the serious consequence that the further widening deficit this year might drag overall economic growth.

“American economic demand is stronger than abroad,” said David Sloan, senior economist at 4Cast Inc. in New York. Still-weak overseas growth in the months to come will mean a “slow and steady gradual increase in the deficit, which will be a modest drag on growth in the U.S.”

“We’re still seeing a trade drag” on overall economic growth, J.P. Morgan Chase economist Daniel Silver said. “We saw pretty substantial dollar appreciation, which is now partially reversed. At some point that’s going to fade, but for the next few quarters we expect that drag to continue.”

The total value of petroleum imports hit the lowest level since September 2002. The average cost of a barrel of imported crude oil was $27.48, the lowest since December 2003. Petroleum has represented a shortened U.S. trade gap since domestic energy production popped up.

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