September 24, 2020

Trade Deficit Widens as Demand for Imports Grows

The Commerce Department said on Tuesday that the trade gap rose 8.5 percent in April from March, to $40.3 billion.

Exports increased 1.2 percent to $187.4 billion, the second-highest level on record. Companies sold more telecommunications equipment, industrial machinery and airplane parts, while vehicles made in the United States and auto parts also rose to a high of $12.8 billion.

But imports grew an even faster 2.4 percent, to $227.7 billion. Sales of foreign cars increased to $25.5 billion. Americans also bought more consumer goods, led by a big gain in foreign-made cellphones.

A wider trade gap can restrain growth because it means American consumers and businesses are spending more on foreign goods than United States companies are gaining in overseas sales.

But Joel Naroff, chief economist at Naroff Economic Advisors, said the wider deficit did show growth in the United States remains stronger than in most other nations. And that growth has helped propel more spending by consumers on imported goods.

“The U.S. economy may not be robust, but with growth continuing, the demand for foreign goods is picking up,” Mr. Naroff said.

Most economists said trade would most likely be neutral in the April-to-June quarter after subtracting slightly from growth in the January-to-March quarter. They expect economic growth has slowed to an annual rate of about 2 percent, down from a 2.4 percent rate in the first quarter.

Still, a weaker global economy is reducing demand for American exports, and that could weigh on growth this year.

Europe’s recession continues to be a problem for American companies. The deficit with the European Union grew 25.6 percent, to $12.4 billion. American exports to the region declined 7.9 percent, while imports from the region rose slightly.

The politically delicate deficit with China surged to $24.1 billion, the highest level since January and the largest with any single nation. Imports jumped 21 percent, while exports fell 4.7 percent. The March deficit had been artificially lowered by shipping disruptions caused by the Chinese New Year holiday.

The weakness abroad has coincided with less investment by American businesses, possibly out of concern that government spending cuts could hobble economic growth.

The deficit so far this year is running at an annual rate of $491.9 billion, down 8 percent from the revised annual deficit of $534.7 billion for 2012.

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