The US trade deficit widened in April with the gap with China soaring as demand for US goods sagged in the slowing Asian giant. The Commerce Department said the trade deficit rose to $37.4 billion in April from a downwardly revised $34.5 billion in March. The trade report reflected a sluggish global trade picture, and weakness in large trading partners China and the Europe Union.
As a result the US gap since January remains smaller than last year: in the first four months of the year, the US trade shortfall shrank 4.8 percent from the same period in 2015. That could turn out more supportive of growth in gross domestic product in the second quarter after a very slow first quarter, said Jim O'Sullivan, chief US economist at High Frequency Economics.
"If sustained, the April levels would result in net exports adding about 0.7 points to the real GDP growth rate in Q2. We doubt that contribution will be sustained in May and June, but the data look helpful for Q2 GDP nonetheless," he said in a client note. Imports rose 2.1 percent to $220.2 billion in April, outpacing a 1.4 percent rise in exports to $182.8 billion. Imports of services surged to a record $41.4 billion.
The United States continued to benefit from weak global energy prices, which pushed the petroleum products deficit to a new historic low of $3.1 billion, the smallest gap since February 1999. The politically sensitive goods trade gap with China soared 16.3 percent in April to $24.3 billion, led by a sharp rise in imports and a fall in exports.
In contrast, the deficit with the 28-nation European Union shrank 9.3 percent to $11.9 billion. With Canada, the number-two US trade partner after China, the trade balance swung from a March deficit to an April surplus of $871.7 million, the largest in history.
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