U.S. trade deficit widens to $39.7B

An increase in exports was trumped by a surge in imports as the U.S. trade deficit grewto$39.7 billionUS in February.

Official data from the U.S. Commerce Department showed Tuesday that the world's largest economy imported $39.7 billionmore than it exported in February, a 7.4 per cent rise fromthe previous month.

Exports hit $143.2 billion, a 0.2 per cent increase andtheir highest level in 16 months, the agency said. Imports rose1.7 per cent to $182.9 billion.

"The trade report is a mixed blessing," BMO economist Sal Guatieri said."The upward trend in both imports and exports reflects strength in domestic and external demand."

America's trade deficit with Canada hit $2.8 billion US. Canadais currently the United States' largest trading partner.

Chinese trade deficit shrinks

The politically sensitive deficit with China fell to $16.5 billion US in February, the lowest level in 11 months, but was still the biggest trade imbalance the United States has with any country.

Pressure has been building in Congress for the Obama administration to take a tougher line with China and impose trade sanctions on Chinese products unless Beijing allows its currency to rise in value against the dollar, which would boost the competitiveness of American products.

Congressional critics accuse China of unfair currency manipulation that is hurting American employment at a time when the country has lost 8.2 million jobs because of a deep recession.

China reported last weekit registered a trade deficit with the world of $7.24 billion US in March, its first trade deficit in six years.

While China contended that the gap showed the country was making progress in shifting to more balanced growth, a key U.S. demand, private economists said they expected the Chinese deficits to be short-lived.

While U.S. imports are expected to rise this year, analysts believe exports will grow as well, reflecting a rebound in the global economy and a weaker U.S. dollar, which helps American producers by making their products cheaper in foreign markets.

President Barack Obama last month set a goal of doubling exports within five years as a way to create two million U.S. jobs.

Economists view that target as ambitious but they do think a rebounding global economy and a further decline in the greenback, especially against the Chinese yuan, would help spark demand for U.S. goods.