The U.S. trade deficit unexpectedly narrowed in April as imports and exports tumbled, leading economists to warn that the Trump administration’s “America First” agenda was curbing trade between the United States and the rest of the world.
The report from the Commerce Department on Thursday does not capture a recent escalation in trade tensions between the U.S. and China, as well as with Mexico. President Donald Trump in early May slapped additional tariffs of up to 25% on $200 billion of Chinese goods, which prompted retaliation by Beijing.
Last week, Trump announced he would impose a tariff on all goods from Mexico in a bid to stem the tide of illegal immigration across the U.S.-Mexican border. Negotiations are ongoing to prevent the duties from kicking in at 5% on June 10.
“U.S. trade with the world is slowing dramatically and the odds are rising that the economy is going to take a big hit,” said Chris Rupkey, chief economist at MUFG in New York.