US trade deficit shrinks in February on export boost

The US trade deficit shrank in February from a record at the start of the year as stronger exports blunted the impact of a rush to secure goods and materials before the Trump administration’s sweeping tariffs. The gap in goods and services trade narrowed 6.1% from the prior month to $122.7 billion, Commerce Department data showed Thursday. The median estimate in a Bloomberg survey of economists called for a $123.5 billion shortfall. The value of exports rose 2.9% in a broad advance, while imports remained near a record. The figures aren’t adjusted for inflation. Merchandise imports declined slightly on a pullback in industrial materials, while most other categories such as business equipment, consumer goods and motor vehicles increased. The report comes as the world is still processing President Donald Trump’s rollout of reciprocal tariffs on Wednesday, which assigns a baseline rate of 10% globally. But several countries, like China and Vietnam, will be hit with levies much higher than that. Imports may very well fall in the coming months which would help to narrow the trade gap, one of Trump’s aims with his policy as businesses try to avoid outsourcing expensive foreign goods. Trump is employing tariffs to ensure fairness in bilateral commerce, encourage foreign investment and expand production in the US, and shore up national industrial security. He also see duties as a means to raise revenue for the government. Last month, Trump handed down 25% duties on certain goods from Canada and Mexico, imposed a global duty on aluminium and steel, and doubled tariffs on Chinese goods to 20%. The president also followed through on a threat to implement a 25% tariff on auto imports that just took effect. The February report showed the merchandise-trade shortfall with Canada narrowed after reaching a record a month earlier on a seasonally adjusted basis, while the deficit with Mexico widened to a record. The merchandise-trade deficit with China narrowed as the value of goods exported to the US declined.