The U.S. trade deficit narrowed in May, and the politically sensitive trade gap with China also slid.
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The Commerce Department said Thursday that the U.S. deficit in the trade of goods and services fell 2.2 percent in May to a seasonally adjusted $46.5 billion. U.S. exports rose modestly to $192 billion — the highest level since April 2015 — on rising shipments of cars and consumer goods, including cellphones. Imports fell slightly.
The trade gap shows the difference between what the United States exports to other countries and what it imports from them.
A growing trade gap is a drag on economic growth. A narrowing gap lifts growth. Critics of unfettered trade say persistent trade deficits are a sign that the United States is losing out to global rivals and that U.S. trade policy is failing American companies and workers. Conventional economists argue that trade deficits reflect broader economic forces — such as Americans' propensity to spend more than they save — and not necessarily bad policies; they note that buying lots of imports can be a sign of economic strength.
President Donald Trump has vowed to reduce America's trade deficits blaming them on bad trade deals and abusive practices by U.S. trading partners, particularly China. His administration also is preparing to renegotiate the North American Free Trade Agreement with Canada and Mexico to overhaul a trade pact he's called a "disaster" for American workers.
The deficit in goods with China fell by 6.2 percent to a seasonally adjusted $30.1 billion. The gap with Mexico rose by 5.6 percent to $6.8 billion.
Despite the dip in May, the overall U.S. trade deficit is up 13.1 percent so far this year to $233.1 billion. Exports are up 6 percent to $957.8 billion. But imports are up more — 7.3 percent to $1.19 trillion.
So far in 2017, the U.S. is running a $336.2 billion deficit in the trade of goods and a $103.1 billion surplus in the trade of services such as banking and tourism.