US Trade Deficit Closes as Imports Decline

The US Commerce Department said today that a 6.6. percent decline in imports in January, resulted in a reduction of the US trade deficit to $37.3 billion, from $39.9 billion in December. A dramatic reduction in imports of oil and foreign automobiles was the main reason for the decline. The trade deficit decline caught many analysts by surprise; earlier predictions called fro a widening of the trade gap to $41 billion.

At the current rate, if projected over the entire year, America’s annual trade deficit would be $447.5 billion for 2010. This would be an increase of 68.9 billion, or 18.1 percent.

The growing trade deficit has become a considerable headache for the Obama administration which continues to level charges of currency manipulation against China. The yuan has been prevented from appreciating against the dollar for the past 18 months in a move intended to maintain China’s competitiveness on the global markets. Yesterday, China reported that its February exports rose by 45.7 percent compared to February 2009.

Source: Associated Press

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