WASHINGTON/OTTAWA: The US trade deficit narrowed in June on a sharp drop in consumer goods imports, and the trade gap with China shrank to its lowest in more than 21 years, the latest evidence of the imprint on global commerce President Donald Trump is making with sweeping tariffs on imported goods. The overall trade gap narrowed 16.0 percent in June to $60.2 billion, the Commerce Department’s Bureau of Economic Analysis said on Tuesday. Days after reporting that the goods trade deficit tumbled 10.8 percent to its lowest since September 2023, the government said the full deficit including services also was its narrowest since then.
Exports of goods and services totaled $277.3 billion, down from more than $278 billion in May, while total imports were $337.5 billion, down from $350.3 billion. The diminished trade deficit contributed heavily to the rebound in US gross domestic product during the second quarter, reported last week, reversing a drag in the first quarter when imports had surged as consumers and businesses front-loaded purchases to beat the imposition of Trump’s tariffs. The economy in the second quarter expanded at a 3.0 percent annualized rate after contracting at a 0.5 percent rate in the first three months of the year, but the headline figure masked underlying indications that activity was weakening.
A centerpiece of Tuesday’s report was the latest steep drop in the US trade deficit with China, which tumbled by roughly a third to $9.5 billion in June to its narrowest since February 2004. Over five consecutive months of declines, it has narrowed by $22.2 billion - a 70 percent reduction. US and China trade negotiators met last week in Sweden in the latest round of engagement over the trade war that has intensified since Trump’s return. The US currently imposes a 30 percent tariff on most Chinese imports, which has fueled a steep drop off in inbound goods traffic from China. Imports from China dropped to $18.9 billion, the lowest since 2009.
The trade negotiators have recommended that Trump extend an August 12 deadline for the current tariff rate to expire and snap back to more than 100 percent, where it had briefly been earlier this year after a round of tit-for-tat increases by both sides. "We’re getting very close to a deal,” Trump said Tuesday in an interview on CNBC. "We’re getting along with China very well.”
Canada’s merchandise trade deficit widened in June to C$5.9 billion ($4.24 billion) as imports grew faster than exports due to a one-time high-value oil equipment import, data showed on Tuesday. The deficit observed in June is the second highest on record after the deficit dipped to its largest in history n April to C$7.6 billion. Analysts polled by Reuters had predicted the trade deficit to widen to C$6.3 billion in June from a downwardly revised C$5.5 billion in May.
Total imports were up 1.4 percent in June to C$67.6 billion from a drop of 1.6 percent in the prior month, Statistics Canada said, adding that excluding the one-time product import which was from the US for an offshore oil project, total imports were down 1.9 percent in June. — Reuters
