The American economy has been running large trade deficits for decades, and despite its history of foreign trade deficits, is doing just fine.

The U.S. economy expanded at a real annual rate of 2.2% in Q1 compared to a 2.9% pace in the fourth quarter of 2017. Indeed, the current economic expansion is almost nine years old, and could become the longest economic expansion ever. 

As the following chart and table illustrate, there was a small drop in the U.S. goods and services trade deficit in April, representing a further sign that the economy was speeding up in the second quarter. The trade gap fell 0.6% to $46.2 billion in April from $47.2 billion in March.

Total exports edged up 0.3% in April to a record high of $211.25 billion, following a 2.2% jump in March. Imports declined 0.2% in April following a 1.4% drop in March.

As Briefing.com points out, the April trade deficit was 6% less than the first quarter average, which implies that despite continuing trade deficits, foreign trade will likely be a positive contributor to stronger American economic growth in the second quarter.

President Donald Trump’s tariffs on imported steel and aluminum have not yet showed up on the trade figures, though they are already pushing up prices and are disrupting some businesses.

Even with the improved trade figures in March and April, the trend of a widening trade deficit in goods and services under President Trump remains intact, despite his aggressive plans to shrink the gap.

Over the first four months of this year, the trade deficit was $201.8 billion, compared with $181 billion deficit in the same period in 2017.  

(Click on image to enlarge)

(Click on image to enlarge)