U.S. Trade Gap Soothed by Weak Dollar, Falling Imports

Trade deficit shrunk to $58.2 billion

The U.S. trade deficit shrank more than expected in March to $58.2 billion, as the weak dollar boosted exports and as imports fell sharply, a government survey showed May 9.

The improvement in the U.S. trade picture was largely tied to the ailing dollar which has tumbled sharply in value against other world currencies and made US-made goods much more affordable. A hefty decline in imports also helped trim the trade deficit.

While economists generally welcomed the 5.7% reduction in the U.S. trade deficit, partly as export growth can be expected to boost U.S. economic growth, they said that a decline in imports suggests weakening American consumer demand.

Although the value of U.S.-made exports slipped marginally in March from the prior month by 1.7% to $148.5 billion, exports remained at historical highs. Exports marked their second-highest peak in March, following a record high in February of $151.1 billion.

Imports declined a significant 2.9% during the month to $206.7 billion, as Americans cut back on foreign purchases which have become more costly due to the weak dollar. Imports dropped as Americans bought fewer foreign-made cars and trucks, consumer goods, industrial supplies and certain foods among other goods, the government survey showed.

The U.S. trade deficit with China narrowed a hefty 12.4% to $16.1 billion in March as Americans snapped up fewer Chinese imports. The decline in overall imports of consumer goods, particularly from China, suggests Americans are tightening their belts amid an economic slowdown triggered by a persistent housing market slump and a related credit squeeze.

America's trade gap with the EU grew 9.1% to $7.5 billion during the month and increased slighly with its northern neighbor Canada to $6.5 billion.

Copyright Agence France-Presse, 2008

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