US trade gap widened in March as imports outpaced exports

THE US trade deficit widened in March as an increase in the value of imports exceeded exports in a sign of solid consumer and business demand.

The gap in goods and services trade grew 4.4 per cent from the prior month to US$60.3 billion, Commerce Department data showed on Tuesday. The median estimate in a Bloomberg survey of economists called for a US$61 billion deficit.

The value of imports rose 2.3 per cent, reflecting a rise in inbound shipments of motor vehicles and consumer goods. Imports of capital goods also rose as the build out artificial intelligence boosted demand for foreign-made computer equipment.

Exports increased 2 per cent in March from the prior month, helped by an increase in shipments of oil and other petroleum products, while consumer goods declined.

The March figures wrap up a quarter in which net exports weighed on gross domestic product by the most in a year.

The war in Iran and effective closure of the Strait of Hormuz, a chokepoint for about a fifth of the world’s oil shipments, represents another challenge to global trade that companies have to navigate.

The disruption comes after trade flows experienced large monthly swings last year as US importers reacted to a slew of ever-changing tariff announcements from President Donald Trump.

The American oil and gas industry stands to benefit from the export of higher-priced crude. Data from the Energy Information Administration shows US exports of crude oil rose to a record recently.

The price of Brent crude, the global benchmark, has increased more than 50 per cent since the war started Feb 28.

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On an inflation-adjusted basis, the merchandise trade deficit widened to US$90.8 billion in March. The trade data showed the US posted the largest petroleum surplus on record, after adjusting for prices.

On a bilateral basis, the US merchandise trade deficit with China widened for a third month. The shortfalls with Canada and Vietnam grew. The US gap with Mexico narrowed slightly. BLOOMBERG