The U.S. trade deficit in goods and services edged up in March to $50.0 billion, slightly worse than February’s $49.3 billion. But the big news in today’s report from the Department of Commerce was that the U.S. goods deficit with China has fallen significantly, to just $20.7 billion. This indicates that tariffs on Chinese imports are having a substantial impact on China trade.
The China deficit of $20.7 billion is our smallest deficit since March 2014. Moreover, the improvement has come largely through a reduction in imports. In March, our exports to China were $10.4 billion, $1.9 billion lower than the year-ago March. However, our imports were $31.2 billion in March, $7 billion less than the March year-ago figure, and our lowest monthly China imports level in three years. The sharp reduction in our China imports shows that the tariffs are working. This is clearly visible by looking at last year’s data. Our March 2019 exports to China were equivalent to the monthly rate of exports in 2018, $10 billion a month. But on the import side, the picture is very different. Our 2018 imports from China averaged $44.9 billion a month. So far this year, our imports are averaging just $35 billion a month, and falling each month.[more...]