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Published: Thu, April 06, 2017
Economy | By Melissa Porter

U.S. trade deficit drops sharply to $43.6 billion in February

U.S. trade deficit drops sharply to $43.6 billion in February

HONG KONG, April 3 Factories across much of Asia posted another month of solid growth in March, rounding off a strong quarter for the world's manufacturers, even as exporters fear a rise in USA protectionism could snuff out a global trade recovery. Imports dropped 1.8 percent to $236.4 billion as the flow of Chinese goods tumbled by $8.6 billion, led by a big drop in cell phone imports. Trump has said he will renegotiate the North American Free Trade Agreement with Mexico and Canada, which Trump called a "disaster" during the campaign.

Overall trade with China during the 11-month period decreased marginally by 0.87 per cent to Dollars 64.57 billion, Commerce and Industry Minister Nirmala Sitharaman informed the Rajya Sabha.

As a result, the politically sensitive US-China trade deficit dropped 26.6% to $23 billion in February.

Last year, United States voters chose a president whose stump speech denounced China for stealing American jobs and rigging trade - but their own opinion of Beijing is improving.

The Atlanta Federal Reserve is forecasting GDP rising at a 1.2% rate in the first quarter, a deceleration from the 2.1% pace seen in the three months from October to December. Treasuries were trading lower. The setback in trade could provide cover for Bank of Canada Gov. Stephen Poloz, who has stuck to a cautious, dovish tone amid improving data due to uncertainty in US trade policy and the competitiveness challenges faced by Canadian exporters.

Services exports on the other hand edged higher by less than $0.1bn to $64.4bn, while imports slipped by under $0.1bn to $43.0bn. Overall, exports are 7.2 percent higher than they were a year ago.

Imports of motor vehicles and parts jumped 1.8 per cent, led by an increase in passenger cars and light trucks.

Energy exports declined 2.6% on the month, although with an increase of over 80% from February 2016 levels on higher crude prices while forestry exports declined 5.1% on the month to give a small year-on-year decline.

Exports and business investment have been Canada's weak spots since oil prices crashed at the end of 2014, gloom that had been lifting on strength in job creation and manufacturing. Data on Friday showed real consumer spending decreased for a second straight month in February, the first back-to-back monthly decline since April 2009.

But food imports hit a record high in February and imports of capital goods were the highest in almost two years. To account for this, many economists add January and February data together, said Dollar.

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