U.S. trade deficit cut down as dollar weakens and exports surge

U.S. trade deficit cut down as dollar weakens and exports surge

Surging exports to meet gaining foreign demand and the weak dollar have helped trim down the U.S. trade deficit to a nine-month low. The Department of Commerce announced on Friday that the trade deficit in October stood at $38.7 billion, significantly lower than the $44.6 billion gap recorded in September. Exports of American goods, led by machine parts, vehicles and agriculture products, surged 3.2 percent amounting to $158.7 billion, its highest mark since August 2008. Imports were valued at $197.4 billion after losing 0.5 percent because of weak demand in U.S. soil for non-American cars and oil. The dollar has been losing value since March 2009, further boosting exports of U.S. goods. The U.S. government wants to double exports to offset the high unemployment rate through increased hiring by U.S. companies.

The U.S. trade deficit with China slid 8.3 percent to $25.5 billion. That remains the largest deficit among the trade partners of the U.S. The current trend points to a repeat of 2008 when the trade gap with China reached its highest level ever. The burgeoning deficit has caused U.S. officials to pressure China into letting the yuan float, among other allegedly unfair trade practices. The undervalued currency lets Chinese products entering the American market to stay inexpensive while making U.S.-made goods costlier in China, dampening demand there. Analysts had predicted that the U.S trade deficit would climb accompanying a rebound of the U.S. economy. However, robust global demand would strengthen exports and compensate for the cost of imports. The weak dollar would also make U.S. exports more competitive in foreign markets.

Posted by James Fried on Saturday December 11 2010, 3:47 AM EST. Ref: AP. All trademarks acknowledged. Filed under Featured News, Finance. Comments and Trackbacks closed. Follow responses: RSS 2.0