US trade deficit hits 18-month low on record exports in May as firms rush to ship goods before trade war with China

Soybeans are loaded from a grain bin onto a truck before taking them to a grain elevator in Dwight, Illinois, on June 13, 2018.
Soybeans are loaded from a grain bin onto a truck before taking them to a grain elevator in Dwight, Illinois, on June 13, 2018.PHOTO: AFP

WASHINGTON (AFP) - A burst of US exports of soybeans, commercial aircraft and other goods drove the American trade gap to its lowest level in 18 months in May, the government reportedon Friday (July 6).

As Washington embarked on a multi-front trade war, the US trade deficit fell 6.6 per cent to US$43.1 billion (S$58.56 billion) in May due to all-time record exports.

There were signs firms tried to ship products out before retaliatory tariffs from China took effect on Friday.

The new figures were released just hours after President Donald Trump unleashed a US$34 billion barrage of border taxes targeting Chinese industries that US officials say have benefited from the alleged theft of American intellectual property.

China immediately retaliated, marking the start of what Beijing called the largest-ever trade war.

Within the numbers, there also were signs importers bumped up their purchases in anticipation of looming tariffs.

Total exports rose nearly two per cent to a record US$215.3 billion, much faster than the 0.4 per cent jump in imports to US$258.4 billion.

 
 
 

Exports of goods rose to their highest on record of US$144.2 billion, supported by all-time record shipments of foods and feeds, including a US$2 billion jump in soybeans which are the subject to tariff threats in the huge Chinese market.

There was confusion over what products Beijing authorities have targeted for retaliation against Mr Trump's offensive, but they said they planned to slap punishing duties on the US soy industry, which is heavily dependent on the Chinese and Mexican markets.

Despite the dip in the US trade deficit, the trend remained little changed, with the gap up nearly eight per cent year-to-date compared to the first five months of 2017.

And the US trade gap with China crept higher, rising US$1.2 billion to US$32 billion.

Americans imported US$43.7 billion in goods from the largest US trading partner, US$1.8 billion more than in April, but exported only US$11.7 billion, US$600 million more than the prior month.

Elsewhere, total petroleum exports rose to US$14.3 billion, the highest since December 2013, while non-petroleum exports also hit an all-time high of US$130 billion.

Trade with countries currently locked in battle with Mr Trump also was robust: Exports to Mexico were US$22.7 billion, a record; while imports from Canada were the highest since December 2014 at US$28.8 billion.