US trade deficit posts sharp retreat on falling imports

WASHINGTON: A jump in exports and similar decline in imports caused the US trade gap in April to reverse most of the prior month’s increase, retreating from a record to $87.1 billion, according to government data released Tuesday.

The $20.6 billion drop from March was the largest decline on record, the Commerce Department reported.

Imports fell by $12.1 billion, half of which was due to the decline in purchases of consumer goods, added to a drop in industrial supplies, while auto imports rose, according to the data.

Companies in recent months have rushed to replenish depleted inventories amid strong demand from American shoppers, and while spending so far has not slowed significantly, sky-high inflation has raised concerns consumers will close their wallets.

Exports increased by $8.5 billion, pushed by jumps in industrial supplies, and foods, notably soybeans, the report said.

While analysts say a narrower trade gap could help growth in the second quarter, Mahir Rasheed of Oxford Economics cautioned that the trade deficit is likely to be a “sharp drag” on economic expansion this year.

“In the near term, export demand will continue to face strong headwinds from fragile economic conditions in Europe amid the ongoing war in Ukraine, while the threat of new lockdowns will keep China’s growth outlook uncertain despite the reopening of Shanghai,” he said.

The US trade deficit with China decreased $8.5 billion to $34.9 billion in April, on a big drop in imports.

For the year-to-date, the total trade gap increased 41.1 percent from the same period in 2021, according to the data.