The politically sensitive US-China trade deficit dropped 26.6 percent to $23.0 billion in February. The US trade deficit fell more than expected in February as exports increased to a two-year high and slowing domestic demand weighed on imports. The narrowing in the trade gap comes as the Trump administration is pushing ahead with its agenda for fair trade and bringing back manufacturing jobs to the United States as it seeks to boost economic growth.The Commerce Department said on Tuesday the trade deficit declined 9.6 percent to $43.6 billion. January’s trade shortfall was revised slightly down to $48.2 billion from $48.5 billion. The politically sensitive US-China trade deficit dropped 26.6 percent to $23.0 billion in February. The decline in the US-China trade deficit comes ahead of Chinese President Xi Jinping’s visit later this week. President Donald Trump has declared China the “grand champions” of currency manipulation. The U.S has its work cut out for it if it is going to try to alter the pattern of trade that has developed between China and US companies over the last 10 to 20 years,” said Chris Rupkey, chief economist at MUFG Union Bank in New York. “American workers might want something done on this, but US companies certainly do not want to see a shift in the globalization trend.” Economists polled by Reuters had forecast the trade gap falling to $44.8 billion in February. When adjusted for inflation, the deficit decreased to $59.7 billion, with exports of goods the highest on record as an earlier drag from a strong dollar fades. The real trade deficit was $65.1 billion in January.The dollar was trading marginally higher against a basket of currencies, while prices for US Treasuries were lower. US stocks were little changed.Despite the decline in the real trade deficit, trade will probably be either neutral or impose a small drag on gross domestic product in the first quarter after subtracting 1.82 percentage points from fourth-quarter growth.
