Trade Deficit Decreases

Analysts said that one of the reasons of the Trade deficit decrease was the weak dollar, which kept demands for import low in April. Demand for foreign consumer goods also went down, which forced the import to decline to $38.9bn from $40.4 bn.

Imports of goods and services went down by 1.9 per cent to $188bn, which helped a lot to raise the trade balance, when the value of foreign oil fell.

Analysts said that the new trade report, which showed slightly improved deficit figures in previous months, should help boost economic growth as measured by the gross domestic product to closer to 1 percent in the first quarter while the big narrowing in the April deficit should help support a rebound in GDP growth to around 2.5 percent or better in the second quarter.

The trade deficit with China increased by 12.3 percent to $19.4bn in April, as US exports to the country went down by 11.5 percent to $4.8 billion and imports went up by 6.6 percent to $24.2bn. This result was the worst showing since January.

U.S. Congress put particular attention to the deficit with China, to which many criticss want to impose economic sanctions in order to punish China for what they called as unfair trading practices such as currency manipulation and copyright piracy.

Sen. Sherrod Brown, D-Ohio, said that the failure to crack down on China and other countries had led to "out of control trade deficits" and a resulting loss of well-paying manufacturing jobs. He added that a recent report by the Economic Policy Institute, a liberal think tank, found that America's soaring trade deficit with China from 1997 through 2006 had displaced production that could have supported 2.17 million U.S. jobs.
The administration tries to settle the situation via high-level talks with the Chinese. However, the latest series of those discussions two weeks ago did not bring any positive effect in the main point of contention, China's undervalued currency.

Treasury Secretary Henry Paulson mentioned that he remained committed to the discussions.
Exports of American agricultural products totaled to $6.7 billion, in April, which was the result of increases in shipments of soybeans, nuts and meat. Exports of industrial materials and consumer goods also showed high records.

Concerning import, the foreign oil bill fell by a slight 0.2 percent to $24.9 billion on a seasonally adjusted basis, when the average price of a barrel of crude oil rose to $57.28, the highest showing since last September.

The Trade deficit with Canada, with which USA has the largest trading relationship, went up by 7.4 percent to $5.8 billion, but Mexico, the other trading partner of USA in the North American Free Trade Agreement, the deficit went down by 22.3 percent to $5.3 billion. The negative balance with the European Union rose by 17.1 percent to $9 billion.- Alla Harutyunyan for HULIQ.COM