United States annual trade deficit shrinks for first time in six years

Soya beans being moved from a grain elevator to a truck to be transported in Iowa in the US last August. Some analysts had said following the phase one trade deal that China may need to roll back some of the tariffs on US goods such as soya beans and

"Under the phase 1 deal, China has to meet a tough target to increase US import by $100 billion this year, so a measure like this was necessary and expected", said Tomo-o Kinoshita, global market strategist at Invesco Asset Management. President Donald Trump, who has dubbed himself "the tariff man", has pledged to shrink the deficit by shutting out more unfairly traded imports and renegotiating free trade agreements. -China trade war past year, Washington slapped tariffs on billions of dollars worth of Chinese goods, including consumer products, leading to a decline in imports.

That decline was offset by big increases in imports from top USA trading partners Canada, which surged 42 percent, and Mexico, which jumped 26 percent.

Some analysts said following the trade deal that China may need to roll back some of the tariffs on US goods such as soybeans and crude oil in order to meet its purchasing commitments. The economy has, however, failed to hit that mark, growing 2.3% in 2019, which was the slowest in three years, after expanding 2.9% in 2018.

This means additional tariffs will come down to five percent from previous 10 percent on USA goods, which were implemented on September 1, 2019.

He warned that, "Firms appear to have met demand by running down inventory, but that can't go on forever". Crude oil imports fell 19.3% to $ 126.6 billion.

Imports of capital goods, such as computer accessories and telecommunications equipment, also declined as American companies curbed their investments due to the uncertainty surrounding the trade war.

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Upon the "phase one" signing, shoe industry leaders were optimistic but urged the administration to roll back all tariffs on consumer goods. That widening reflects steady gains in American consumer spending, which drives imports. Chinese officials are hoping the US will agree to some flexibility on pledges in their phase-one trade deal, people familiar with the situation said, as Beijing tries to contain a health crisis that threatens to slow domestic growth with repercussions around the world.

The yuan extended gains after news on the tariff reduction, with the offshore rate advancing as much as 0.26 per cent to 6.9573 per USA dollar.

December exports were $209.6 billion, $1.6 billion more than November exports.

-China trade war have eased, with Washington and Beijing signing a Phase 1 trade deal last month.

Under the tariffs, US companies importing goods from China are paying the levies that flow to the Treasury.

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