United States trade gap rises 6th straight month to 9 ½-year high

Canada's trade deficit widens to $2.7B in February

Canada's trade deficit widens to $2.7B in February

At 9:43 a.m. EDT (1343 GMT), the Canadian dollar was trading almost unchanged at $1.2772 to the greenback, or 78.30 USA cents.

News of the worsening trade deficit comes as the United States and China are embroiled in tit-for-tat tariffs which have rattled global financial markets.

Canadian trade deficit widened in February to CAD 2.7 billion from January's CAD 1.9 billion, as the rise in imports surpassed the rise in exports.

"But net trade is still on course to have subtracted from first-quarter GDP growth, and the widening deficit will not have gone unnoticed in the White House", Hunter said.

A decade of steady job growth and rising incomes has driven stiff demand among consumers and industry in the world's largest economy.

Andrew Hunter, US Economist at Capital Economics, noted the wider trade deficit was entirely due to a one-off royalty payment for broadcasting rights to the Winter Olympics.

Despite the rebound in export volumes, the trade deficit remains disappointing given the strong USA economy and weak Canadian dollar, said Royce Mendes, senior economist at CIBC Economics, in an email note to clients.

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"Tariffs may sound like a good way to change the pattern of trade, but they tend to raise prices" without changing fundamental drivers of trade, he added.

Canada's trade deficit was 2.69 billion Canadian dollars (about 2.1 billion US dollars) in February, surging from 1.94 billion Canadian dollars in January as rail transport problems cut exports of wheat and canola, according to Statistics Canada Thursday.

The trade gap has continued to rise since Trump entered the White House partly because the US economy is strong and American consumers have an appetite for imported products and the confidence and financial wherewithal to buy them.

Washington and Beijing have threatened in recent days to put import duties on about $50 billion of each other's exports - with the Chinese targeting politically sensitive United States goods such as soybeans and the Americans pointing to high-end manufactured items in the aerospace, auto, pharmaceutical and other sectors. Trump is seeking to cut the annual USA deficit with China by $100 billion. The deficit with Mexico surged 46.6 percent in February.

Overall imports in February, according to Statistics Canada, increased 1.9 percent to 48.6 billion dollar while exports edged up 0.4 percent to 45.9 billion dollar. There were also increases in exports of capital goods such as civilian aircraft and drilling and oilfield equipment.

But the U.S. goods deficit was still at its highest level since July 2008 at $76 billion - with capital goods imports at an all-time high of $57.8 billion. The blue-chip Dow Jones Industrial Average was up 1.3 percent toward 1600 GMT.

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