U.S. Trade Gap Widens to Near Record as Imports Surge
By Eric Martin (Bloomberg) —
The U.S. trade deficit widened to the third-biggest on record in January as imports surged to the highest since mid-2019.
The gap in trade of goods and services expanded to $68.2 billion in January from $67 billion in December, according to Commerce Department data released Friday. That compares with a median estimate for a shortfall of $67.5 billion in a Bloomberg survey of economists.
Total imports increased 1.2% to $260.2 billion, the most since August 2019. Outward-bound shipments of goods climbed 1% to $191.9 billion, but still remains below pre-pandemic levels.
The merchandise-trade deficit fell 1.6% to $85.4 billion, while the nation’s surplus in services trade grew for the first time in seven months, increasing to $17.2 billion.
The U.S. last year posted its biggest annual trade deficit since 2008 as the global health crisis depressed export markets for American companies. The pandemic played a pivotal role in spoiling Donald Trump’s four-year push to rebalance the deficit, with Covid-19 crimping demand and upending supply chains. The former president slapped hundreds of billions of dollars of tariffs on the European Union and on China, sparking a trade war that hurt U.S. manufacturing and agriculture even as it protected some slices of industry like steelmakers.
While President Joe Biden criticized Trump’s strategy and promised to work with global allies to confront China on issues including intellectual property theft, he’s also indicated that he won’t immediately remove the tariffs, taking time to review U.S. policy.
A global shortage of semiconductors has idled production at some auto plants and prompted President Joe Biden to direct his administration to address shortfalls in output 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.
Exports of U.S. autos fell the most since May, dropping 5% to $12.6 billion.
The value of imports of semiconductors increased to $5.02 billion in January; they peaked at $5.7 billion last March. Despite the shortages in the U.S., exports of the chips climbed to $5.2 billion.(Updates with graphic.)
© 2021 Bloomberg L.P.
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