The US economy is recovering much faster than the rest of the world, a reality playing out in the trade numbers as the gap widens. Americans are starting to spend again, while American exporters face sluggish foreign demand in countries slower to recover.
The US trade deficit jumped to an all-time high of $ 74.4 billion in March as the improving US economy boosted purchases of imported foreign goods.
The deficit, the gap between what the United States buys overseas and what it sells to other countries, was 5.6% higher than the February gap of $ 70.5 billion. , the Commerce Department reported on Tuesday.
Imports rose 6.3% to $ 274.5 billion, while exports rose 6.6% to $ 200 billion. The United States imports so much more than it exports in dollar terms, the rise in imports has been greater.
The politically sensitive trade deficit with China increased 11.6% to $ 27.7 billion, which, as usual, was the largest deficit with a single country.
In the first three months of this year, the U.S. trade deficit stands at $ 212.8 billion, up 64.2 percent from the deficit for the same period last year, at a time when the US economy has been essentially shut down by the coronavirus pandemic.
The United States recorded a deficit for all of 2020 of $ 681 billion, the largest annual gap since 2008, as the coronavirus disrupted global trade and confused President Donald Trump’s “America First” policy.
The US economy is recovering much faster than the rest of the world and this is playing out in the trade numbers as the gap widens. Americans are starting to spend again, while American exporters face sluggish foreign demand in countries slower to recover.
“Stronger US growth relative to that of trading partners will lead to an increase in the trade deficit in 2021,” said Oren Klachen, chief US economist. “US domestic demand will maintain a strong pull on imports, thanks to improved sanitary conditions, reopenings and historic fiscal expansion.”
During his four years in office, Trump pursued a harsh trade strategy that used punitive tariffs on products from other countries to eliminate the United States’ trade deficits with the rest of the world and restore millions of dollars. manufacturing jobs lost.
Trump has sought to narrow the trade gap by imposing tariffs on imported goods on a scale not seen since the trade wars of the 1930s that helped push the United States and the rest of the world into a great depression.
Trump’s efforts have failed to change trade imbalances and angered U.S. allies as well as competitors such as China. So far, however, the Biden administration has not reversed Trump’s policies.
Some analysts believe President Joe Biden is proceeding with caution because overturning all of Trump’s policies could increase the risks for a Democrat close to the unions. Organized workers have long complained about US free trade policies before Trump.
For the month of March, the U.S. surplus in trade in services, items such as air flights and consulting fees, fell to $ 17.1 billion, a drop that analysts blamed on COVID-19 restrictions that have limited tourism. Normally, the United States is able to reduce its overall deficit by a larger amount through larger surpluses in trade in services.
The goods deficit totaled a record $ 91.6 billion in March, down from a deficit of $ 87.9 billion in March.