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Trade gap narrows, drops 3.6 percent in March on exports to Canada, South Korea

Mercedes-Benz sedans sit inside a car-carrier before being

Mercedes-Benz sedans sit inside a car-carrier before being hauled away for distribution from the company's Vehicle Processing Center in Baltimore on March 27, 2014. Photo Credit: AP

WASHINGTON - The U.S. trade gap narrowed in March as exports rebounded to the second highest level on record, led by strong gains in sales of aircraft, autos and farm goods.

The U.S. Commerce Department says the deficit declined to $40.4 billion, down 3.6 percent from a revised February imbalance of $41.9 billion, which had been the biggest trade gap in five months.

U.S. exports rose 2.1 percent to $193.9 billion with exports to Canada and South Korea hitting all-time highs. Imports also rose but by a slower 1.1 percent to $234.3 billion, reflecting increased shipments of cellphones, clothing and other consumer goods and increased demand for heavy machinery and other capital goods.

A smaller trade deficit can boost growth because it means U.S. companies are earning more on their overseas sales.

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