The 2018 first quarter goods trade deficit with China and with the world is significantly larger than figures for the first quarter of 2017 even as the March monthly goods deficit with China declined as USA exporters accelerated shipments to beat tariffs that may be imposed relating to the 301 action, which gave an extra boost to us exports overall this month.
America and China are engaged in a tit-for-tat dispute over import tariffs, which has sparked volatility in markets since the scrap began in March.
President Donald Trump has argued the US should reduce its trade deficits and in March he announced tariffs of 25% on imported steel and 10% on aluminum imports, with temporary exemptions in place for some countries.
Exports for March reached a record high of $208.5 billion, with increases in many goods and services exports, particularly to China. He recently slapped 25 per cent import duties on steel and 10 per cent on aluminium.
Economists who critique the significance of bilateral deficits nonetheless agree that large sustained overall trade deficits can suppress demand and slow economic growth. The difference means that net trade likely subtracted about 1 percentage point from Canada's annualized rate of gross domestic product growth in the quarter, economists said - the third straight quarter that trade has been a drag on growth. Imports from China fell 2.1 percent. In a separate report, the Labor Department said initial claims for state unemployment benefits rose 2,000 to a seasonally adjusted 211,000 for the week ended April 28.
The goods trade deficit with the world of $196.7 billion is larger than any period since before the 2008 financial crisis - up 8.5 percent over the first quarter of 2017 deficit of $181.4 billion. There were also increases in exports of soybeans, corn and crude oil.
Meanwhile, imports from China led the increase with 26.6 percent, mainly on higher imports of computers and computer peripheral equipment and of communications and audio and video equipment.
The import side showed encouraging consumer demand, with passenger vehicles and light trucks up 13 per cent month over month, and consumer products up almost 8 per cent. Economists said the strength reflects Canada's continued strong labour market, as well as the acceleration in wage growth in recent months.
The U.S. has run annual trade deficits since the 1970s, importing more goods than it exports and posting a more modest trade surplus in services.
Exports to the United States rose 1.2 percent while imports increased by 3.1 percent. Exports were up 3 percent, the biggest one month gain since July 2016.
March's drop in core capital goods orders and shipments suggest business spending on equipment is slowing.