US Trade Gap Narrows In February Ahead Of Bulk Of Trump Tariffs

The US trade deficit narrowed in February, according to government data released Thursday that was collected before President Donald Trump launched his most recent salvo of punishing worldwide tariffs.

The overall trade gap of the world's biggest economy shrank 6.1 percent to $122.7 billion, said the Commerce Department, slightly more than analysts expected.

In February, Trump unveiled -- then halted -- sharp tariffs on Canada and Mexico, while imposing added duties on China.

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In the weeks since then, he has rolled out painful levies on sectors including steel, aluminum and autos, with a global 10 percent tariff to hit US trading partners in early April. Some countries and blocs will face even higher rates down the line.

All of this is set to weigh on US trade, as retailers and manufacturers scramble to adjust their supply chains and avoid cost increases.

"Front-loading of imports remained in full effect in February," said senior US economist Matthew Martin of Oxford Economics in a note, referring to businesses buying more products to get ahead of tariff hikes.

Tariffs announced on trading partners on Wednesday "will add uncertainty to the outlook," he added, noting that businesses will not be able to pre-empt these charges with an imminent imposition date of April 5.

"This sets second quarter imports on track to decline massively, while retaliatory tariffs from foreign countries will weigh on exports," Martin added.

In February, the contraction of the US trade deficit came as exports rose and imports were flat, government data showed.

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Exports rose by $8.0 billion from January to $278.5 billion in the month, while imports were almost flat at $401.1 billion.

Sectors driving exports included industrial supplies and materials such as nonmonetary gold, alongside autos and parts.

Imports edged down slightly in the month overall, as purchases in sectors including consumer goods failed to offset falls in other areas such as industrial supplies.