The U.S. trade deficit shrank in 2019 for the first time in six years as the trade war between U.S. and China curbed imports
WASHINGTON - The U.S. trade deficit fell for the first time in six years in 2019 as the White House’s trade war with China curbed the import bill, keeping the economy on a moderate growth path despite a slowdown in consumer spending and weak business investment.
“Since that entire drop came from the huge change in the China deficit, don’t expect further declines in the years to come,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania. At the height of the U.S.-China trade war last year, Washington slapped tariffs on billions worth of Chinese goods, including consumer products, thumping imports.The White House has also sparred with other trading partners, including the European Union, Brazil and Argentina, accusing them of devaluing their currencies at the expense of U.S. manufacturers. But those efforts did little to rein in the goods trade deficit with the EU, which reached an all-time high of $177.9 billion.
Though the trade deficit is expected to swell, the economy is likely to continue growing moderately, with other reports on Wednesday showing a pickup in activity in the services sector and private employers boosting hiring in January. The ADP report has a poor record predicting the private payrolls component of the government’s more comprehensive employment because of methodology differences. January’s employment report is scheduled for release on Friday.
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