Nebraska News Desk

U.S. trade deficit plunges 16.9% in February

 Breaking News
  • No posts where found

U.S. trade deficit plunges 16.9% in February

The U.S. trade deficit plunged in February as both imports and exports sank, driven by a since-settled trade dispute and a global economic slowdown that has cut into oil prices and caused the dollar to rise in value. The Commerce Department said Thursday that the deficit plummeted 16.9% to $35.4 billion in February, down from $42.7 billion in January.635635669254251527-AP-Trade-Gap

The sharp decrease reflects a $10.2 billion drop in imports since January, likely due to cheaper oil prices and a since-resolved West Coast ports dispute that interrupted the flow of 20% of the nation’s imports. The dispute led to sharp declines in imported goods from China and Japan, causing the trade deficit with both countries to fall. Exports also tumbled because a strengthening dollar has caused American-made goods to be more expensive abroad. The rising value of the dollar has curbed expansion at U.S. factories, according to an index released Wednesday the by Institute for Supply Management, a trade group of purchasing managers.

The trade deficit has fallen 3.2% compared to the same period last year. Economists expect the deficit to widen further in 2015, as a growing U.S. economy should fuel demand for imports while the stronger dollar reduces exports. Imports account for roughly 16% of gross domestic product, while exports account for 13% of GDP, according to analysts at Bank of America. The resulting trade deficit — which totaled $505 billion last year — represents roughly 3% of GDP and causes a drag on overall growth.

The influence of the ports dispute was evident in the trade figures with China. Imported goods from China decreased $3.5 billion to $36.3 billion in February, a drop that may prove temporary based on historic patterns. The politically sensitive deficit with China set another record high last year, surging 23.9% to $342.6 billion. That constant gap has created pressure on Congress and the Obama administration to take tougher actions against what critics see as China’s unfair trade practices. U.S. manufacturers say that China is manipulating its currency to keep it artificially low against the dollar.