U.S. Trade Deficit Down 12.7% From January Through March

The U.S. trade deficit shrank 12.7% from January through March, the biggest improvement in five years, the government reported today.

The Commerce Department reported that the difference between what the United States imports and what it exports totaled $35.9 billion for the first three months of 1988, down from a deficit of $41.2 billion in the last three months of 1987.

The 12.7% decline represented a dramatic turnaround in a deficit that has steadily worsened over the last five years. It was the biggest quarterly improvement since an 18.9% decline in the fourth quarter of 1982.

The new figures confirmed an improvement that had already shown up in the department’s monthly merchandise trade reports. The improvement in the first quarter reflected the fact that exports climbed faster than imports, although both hit highs.

Exports jumped 9.8% to a record $74.7 billion while imports rose 1.3% to a record $110.6 billion.

The Administration is counting on strong export sales to provide close to half of total economic growth in the United States this year. The figures for the first quarter show that this estimate is on track.

President Reagan has also pointed to the improvement in the trade deficit as an argument against passing protectionist trade legislation. Reagan on Tuesday vetoed the omnibus trade bill, and Republicans in the Senate are expected to cite the big drop in the trade deficit as a strong argument that this would be the wrong time to threaten trade retaliation against other countries who are purchasing record levels of U.S. products.

Exports of both agricultural and non-agricultural goods increased in the first quarter.