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Published: Fri, May 04, 2018
Economy | By Melissa Porter

Canada posts record trade gap as imports eclipse export rebound

Canada posts record trade gap as imports eclipse export rebound

The deficit narrowed to $25.9 billion from $29.3 billion, figures from the U.S. commerce department showed today.

In March, exports of goods and services increased 2.0 percent to an all-time high of $208.5 billion, lifted by a $1.9 billion increase in shipments of commercial aircraft. Data for February was revised slightly to show the trade gap widening to $57.7 billion, which was the highest level since October 2008, instead of the previously reported $57.6 billion.

The Commerce Department says the trade deficit - the difference between what America sells and what it buys in foreign markets - slid to $49 billion, down from $57.7 billion in February and lowest since September.

Under his "America First" mantra, President Donald Trump has pledged to reduce USA trade deficits with Japan and other major trading partners such as China, Mexico and Germany.

More broadly, the USA trade gap has widened this year, increasing 18.5% in the first three months of 2018 compared with the same period a year earlier.

The U.S. has run large deficits for years, however, and that's not going to change anytime soon despite a concerted push by President Trump to reduce the gap.

But economists said the data was not all bad news for the economy, as exports rose and a surge in imports pointed to strength in domestic demand.

Talk of a potentially damaging trade war has even contributed to recent declines in USA stocks and it may be hurting the economy.

"Some of the investment-related products were up solidly as were some of the consumer products", said Doug Porter, chief economist at BMO Capital Markets. Crude oil imports dropped by US$0.5 billion in March.

The gap between Canada's 10-year yield and its USA counterpart widened by 1 bp to a spread of -61.1 basis points.

So too were higher exports to Britain (unwrought gold), South Korea (aircraft) and Japan (copper and coal). "They're buying beans in Canada, in Brazil, mostly Brazil, but very deliberately not buying anything from the U.S".

The U.S. imported far few consumer goods such as TVs, computers, toys and appliances.

Exports to China jumped 26.3 per cent in March. Imports from China fell 2.1 percent.

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