Background

The U.S. trade deficit in goods and services rose 5.5 percent in August to the biggest monthly total in 14 years and the third-highest ever. Imports and exports both increased for the third straight month, with press reports indicating that imports are now just three percent lower than prior to the COVID-19 pandemic while exports are down about 18 percent.

 

According to trade statistics released Oct. 6 by the Department of Commerce, the monthly trade deficit of $67.1 billion reflected a 2.1 percent increase in exports to $171.9 billion and a 3.2 percent rise in imports to $239.0 billion. The year-to-date deficit increased 5.7 percent from August 2019 as exports fell 17.6 percent and imports lost 13.1 percent.

 

The deficit in goods trade rose 3.7 percent from July to $83.9 billion, the second straight month that figure has reached an all-time high. Imports of goods were up 3.3 percent to $203.0 billion, including increases of $2.7 billion in pharmaceutical preparations, $2.1 billion in non-monetary gold, and $1.0 billion each in passenger cars and crude oil along with a decrease of $1.6 billion in finished metal shapes. Exports of goods were up 3.0 percent to $119.1 billion, including increases of $1.8 billion in non-monetary gold and $1.0 billion in soybeans along with a $1.2 billion decrease in semiconductors.

 

The services surplus fell again, declining 4.0 percent to $16.8 billion, the lowest total in almost nine years. Imports rose 2.3 percent to $36.1 billion and exports edged up 0.2 percent to $52.8 billion.

 

In an unusual move, U.S. Trade Representative Robert Lighthizer issued a statement seeking to put the new figures in context. He said the deficit increase reflects the fact that the U.S. economy has recovered more quickly from the pandemic than those of its trading partners, meaning imports have rebounded faster than exports. He also pointed out that for the year to date the overall U.S. goods trade deficit is down 2.4 percent and there have been declines in the individual goods trade deficits with China (-16.5 percent), the European Union (-7.7 percent), Japan (-34.7 percent), Canada (-36.0 percent), and Korea (-7.0 percent). In addition, he said, prior to the pandemic the U.S. goods trade deficit had declined from the previous year in five of the last six quarters.

 

Monthly changes in U.S. trade deficits or surpluses with specific trading partners in August included the following.

 

Country/region

Deficit

% Change

Surplus

% Change

China

$26.4 billion

-6.7

 

 

European Union

$15.7 billion

+19.8

 

 

Mexico

$12.5 billion

+8.7

 

 

Germany

$4.6 billion

+53.3

 

 

Japan

$4.3 billion

+26.5

 

 

Italy

$2.6 billion

+44.4

 

 

India

$2.3 billion

+15.0

 

 

France

$2.2 billion

-12.0

 

 

South Korea

$2.2 billion

+46.7

 

 

Canada

$1.2 billion

+140

 

 

South/Central America

 

 

$2.4 billion

-17.2

Hong Kong

 

 

$1.7 billion

+21.4

Brazil

 

 

$1.0 billion

+20.0

United Kingdom

 

 

$1.0 billion

+66.7

Saudi Arabia

 

 

$0.2 billion

-50.0

Singapore

 

 

$0.1 billion

Shift from $1.0 billion surplus

 

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