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By Eric Martin (Bloomberg) —
The U.S. merchandise-trade deficit widened in January as imports climbed to a record high, signaling a continuing recovery in demand from American consumers.
The deficit grew to $83.7 billion from $83.2 billion in December, according to Commerce Department data released Friday. Economists in a Bloomberg survey had called for an $83 billion shortfall in January. Imports rose 1.1% to $218.9 billion, while exports increased 1.4% to $135.2 billion, the highest since February 2020.
Imports of consumer goods climbed to a record $62.8 billion, while inward-bound shipments of food and beverages also reached a new high of $13.8 billion. The increases were countered by a slump in automotive vehicle imports, which fell 4.7%, the most since May, to $31.6 billion. Vehicle exports also declined the most in eight months, reaching $12.6 billion.
A global shortage of semiconductors has idled production at some auto plants and prompted President Joe Biden this week to direct his administration to address shortfalls in production of the chips as it reviews supply chains. Automakers are cutting workers’ hours due to the lack of semiconductors needed for everything from transmissions to touchscreens, and unions are raising alarm about the prospect of layoffs.
Overall, the value of U.S. exports plus imports surged to $354 billion, the highest since October 2018, signaling a recovery in trade.
The data come as a disrupted flow of containers worldwide is swamping America’s biggest ports and wreaking havoc on the nation’s strained supply chains. The bottlenecks are the confluence of surging imports, sick longshoremen, Covid-19 workplace limitations, and trucker and equipment shortages.
China regained the top spot among U.S. trade partners for goods in 2020 after finishing behind Mexico and Canada in 2019. The Asian nation and the U.S. fought a trade war under the Trump administration that continues to see tariffs applied on about $335 billion of Chinese goods annually a year ago.
Washington and Beijing signed the first phase of a trade agreement that’s supposed to see China buying an extra $200 billion of American goods in two years. Beijing missed its 2020 trade-deal targets as the global pandemic upended shipping and supply chains.
Biden’s nominee for trade chief, Katherine Tai, on Thursday called on China to live up to the commitments in its trade pact with the U.S. — the strongest signal yet that the new administration plans to build on the accord brokered by its predecessor rather than scrap it.
The report Thursday also showed retail inventories retreated 0.6% from the prior month, the first decrease since June. Wholesale inventories rose for a second month, climbing 1.3%.
The trade picture will come into greater focus when the final report, which includes services, is released on March 5.© 2021 Bloomberg L.P
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