2018.04.1301:15:00UTC+00China Exports Fell in March but 1st Quarter Trade Surplus with U.S. Sharply Grew

China's exports growth dropped in March, the first decline since February 2017, raising questions about the health of one of the economy's key growth drivers even as trade tensions rapidly heighten with the United States.

March import growth surpassed expectations, however, suggesting its domestic demand may still be strong enough to cushion the blow from any trade shocks. That left China with a rare trade deficit for the month, also the first decline since last February.

China's March exports dropped 2.7 percent from the previous year, down from a sharper-than-expected 44.5 percent jump in February, which economists believe was heavily distorted by seasonal factors.

For the first quarter as a whole, exports still increased 14.1 percent.

The latest readings on the health of China's trade sector follow weeks of tit-for-tat tariff threats by Washington and Beijing, triggered by U.S. frustration with China's massive bilateral trade surplus and intellectual property policies, that have raised fears of a global trade war.

A stronger currency could also be starting to erode Chinese exporters' competitiveness. The yuan rose around 3.7 percent against the U.S. dollar in the first quarter this year, on top of a 6.6 percent gain last year.

China's exports to the U.S. increased 14.8 percent in the first quarter from a year earlier, while imports rose 8.9 percent. That sent its quarterly trade surplus with the U.S. jumping 19.4 percent to $58.25 billion, though the March reading narrowed to $15.43 billion from $20.96 billion in February.

China's total aluminum exports in March rose to their highest since June, just as the United States imposed a 10 percent tariff on imports of the metal on March 23 along with a 25 percent duty on steel imports.