• The massive surge in the trade deficit in March was driven by a spike in imports, which reflects the resolution of the West Coast port dispute in February and possibly the late occurrence of the Chinese New Year holiday this year (1). The container shipment data ffrom West Coast ports indicates that imports fell back sharply in April (2). At the same time, it appears that exports increased a little (3).

• That surge in the US trade deficit in March was principally due to a massive jump in the bilateral deficit with China specifically. But we already know from China's trade data that, after a big surge in the bilateral surplus it runs with the US in February, it ran much smaller surpluses in March and April (4). Given the delay in shipping those goods to the US, that should translate into a narrowing in the US trade deficit with China in April and possibly even May and June too. The increase in the bilateral deficit that the US runs with China over the past year is surprising since the dollar has remained broadly unchanged against the renminbi (5) The rebound in the euro-zone PMI points to a pick-up in US exports to the region (6).