The US trade deficit continued to shrink in February, fueled by falling imports from China as that country struggled with the coronavirus outbreak, the government reported Thursday.

The Commerce Department report on imports and exports was compiled before the worst of the virus's economic disruptions hit the United States, where many businesses have since been forced to close causing millions to lose their jobs, and others complaining of scarce supplies.

The US trade gap dropped another $5.5 billion from January to $39.9 billion, slightly worse than expected. February exports were $207.5 billion, $0.8 billion less than January, while imports were $247.5 billion, $6.3 billion less than January imports.

As in January, a sharp decline in imports from China played a large role in the data, after President Donald Trump escalated his confrontation with Beijing in 2019, leading to tariffs on nearly all products traded with the country.

The economic powers declared a truce declared in January but left many of those punitive duties in place.

A slowdown in trade with China accounted for much of the decrease in the US trade deficit recorded in February
A slowdown in trade with China accounted for much of the decrease in the US trade deficit recorded in February AFP / Frederic J. BROWN

Goods imports from China fell $4.2 billion, accounting for the narrowing of the deficit with the Asian nation to $19.7 billion.

The data showed few signs of the agreement Trump touted to ramp up China's purchases of US products, as goods exports fell $0.3 billion to $7.5 billion in a month where Beijing locked down entire cities to stop COVID-19 from spreading.

The overall US goods deficit fell $5.9 billion to $61.2 billion, while the US surplus in the services trade recorded a slight drop to $21.3 billion.

With the new USMCA continental free trade pact having taken effect, the deficits with Canada and Mexico both grew compared to January, to $1.6 billion and $9.7 billion, respectively.

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