The Commerce Department reports on the U.S. trade deficit in March at 8:30 a.m. Eastern Tuesday.
WIDER DEFICIT: The expectation is that the deficit increased to $41 billion, according to a survey of economists by data firm FactSet.
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TRADE DRAG: In February, the U.S. trade deficit narrowed to $35.5 billion, down from $42.7 billion in January, as imports fell more than exports.
That is not expected to last given the spiking value of the dollar. A strong dollar makes U.S. products more expensive overseas while lowering the price of imported products and making them more competitive in the U.S. market.
Because of that trend, expected to continue this year, economists see an increasing drag on the U.S. economy as the trade gap widens.
The higher deficit trimmed overall economic growth by 1 percentage point in the fourth quarter and by 1.25 percentage points in the January-March quarter. That helped to drag overall growth down to a meager 0.2 percent in the first three months of the year.
While analysts are forecasting that the overall economy will regain momentum in the current quarter, growing at an expected rate above 2 percent, that strength is predicted to come from stronger consumer spending. Trade is expected to remain a drag.
President Barack Obama has been pushing the benefits of free trade in an effort to convince Congress to pass the legislation he needs to complete a sweeping trade agreement with 11 other nations, an agreement known as the Trans-Pacific Partnership.
The legislation, approved by committees in both the Senate and the House, would force Congress to consider the trade agreement under fast-track rules. That means an up-or-down vote with no amendments from Congress.
The fast-track legislation is expected to win Senate approval but passage in the House is more dicey. Democrats in both chambers are demanding that the administration negotiate stronger labor and environmental standards and ban currency manipulation, with some believing that China is doing so to gain trade advantages.