Goods Deficit Flat at $91.4 Billion in February, As Mexico Takes Over China’s Position as Top Source of Imports

Mexico currency

Any slowdown in the U.S. economy being discussed by financial pundits was not reflected in February’s trade data.  The goods deficit remained relatively flat at $91.42 billion (it was $91.7 billion in January), but the first two months of the year have recorded slightly higher deficits than the first two months of 2023, coming in at $183.3 billion total, the Commerce Department’s Bureau of Economic Analysis said on Thursday. Those figures suggest we are on course for another year of a trillion-dollar goods trade deficit.

All told, the goods and services deficit rose 1.9% in February to $68.9 billion. That monthly figure is now higher than the three-month average. The services trade includes things like travel and tourism, intellectual property, and subscription fees for software.

According to the BEA, some of the biggest jumps in imports were recorded in cell phones, cars and food as the U.S. is increasingly looking to become a net food importer.

The February figures show the top three trade surpluses, in billions of dollars, were with South and Central America ($5.5), the Netherlands ($4.3), and Australia ($1.6), while the top three deficits were, in billions of dollars, China ($21.9), the EU ($17.6) and Mexico ($15.3). The deficit with Mexico increased by $2.7 billion in February. It was $12.6 billion in January.

Worth noting, Vietnam is still the No. 4 biggest deficit nation with the U.S. when it comes to the goods trade. But February figures were nearly identical to January at $8.72 billion each month.

The real story is Mexico.

While the month-over-month goods deficit with China fell by around $3.7 billion, the deficit with Mexico rose by $2 billion over the same period. In the first two months of 2024, the U.S. imported $78.28 billion worth of goods from Mexico versus $67.68 billion from China. Last year ended with Mexico surpassing China as the top source of imports. That trend continues.

The U.S. is trading more with allies, it appears, perhaps to the detriment of mainland China supply chains. The deficit with the EU, however, remains relatively flat at $30.81 billion for January and February versus $30.48 billion in the first two months of 2023. The trade balance with Canada also remains stable, coming in lower at $11.90 billion in Jan-Feb 2024 vs $12.39 billion in Jan-Feb 2023. Mexico is quickly replacing China as the low-cost, preferred reshoring hub for American manufacturing.

Some highlights from Thursday’s trade numbers:

The U.S. trade imbalance for food and live animals was around $3 billion in February, with a two-month trade deficit of $7.3 billion. This includes items known to have risen sharply in price during the pandemic inflation years: beef, eggs, and seafood.

Trade in advanced technologies, a harbinger of America’s economic future, shows a two-month deficit of $36.31 billion, which is higher than the two months of 2023 and 2022. This includes items the U.S. strives to be an IP leader in, such as biotech and life sciences. In fact, the only advanced tech in surplus was aerospace and weaponry, much of which is military contracts to developing countries.

Passenger vehicle imports from Mexico were $3.69 billion in February versus $3.18 billion in January. Those finished vehicle figures are similar to imports from Japan and South Korea. Where Mexico shines here is along the auto supply chain – namely auto parts geared for final automotive assembly in the U.S.  When auto parts and trucks are added to the mix, Mexico sold $14.91 billion worth of vehicle goods in February versus $13.75 billion in January, which is Japan, South Korea and Germany combined.


CPA is the leading national, bipartisan organization exclusively representing domestic producers and workers across many industries and sectors of the U.S. economy.

The latest CPA news and updates, delivered every Friday.


Get the latest in CPA news, industry analysis, opinion, and updates from Team CPA.