The U.S. goods and services deficit for April fell by 19.1% over the month to $87.1 billion as imports cooled by 3.4% to $339.7 billion and exports rose by a similar amount to settle at $252.6 billion. Despite the slowdown, the goods and services trade deficit is already at $370.8 billion for the first four months of the year. That’s a record-breaker. Last year it was $262.9 billion at this time, the Bureau of Economic Analysis said on Tuesday.
For goods, the April deficit was $107.7 billion versus $126.8 billion in March. All told, the goods deficit is $449.9 billion so far this year compared to $352.7 billion in the same period last year. At the current average rate of a $112 billion goods deficit per month, the U.S. will likely end the year with a $1.2 trillion goods deficit. Last year ended with a $1.09 trillion goods deficit, the biggest ever.
“Our goods trade deficit with China continues to run at over $30 billion a month this year and recent actions, such as the waiver of tariffs for solar panels imported from southeast Asia will add to our deficit,” said CPA chief economist Jeff Ferry, referring to Monday’s announcement of emergency tariff waivers for Southeast Asian solar products. “While most of the solar panel imports come directly from Southeast Asia, much of the value comes indirectly from China and all of it represents a missed opportunity to rebuild a vital U.S. industry.”
Our Biggest Trade Deficits
The biggest goods trade deficits for the month were led by China at $34.9 billion, followed by the European Union at $17 billion, Mexico at $11.5 billion, and Vietnam at $9.8 billion. One of the reasons for the large gap with Vietnam is owed to the fact that it is not a big importer of U.S. goods, and it has become an outpost for Chinese multinationals, especially in the furniture, lighting, and solar panel manufacturing sectors.
- The deficit with China decreased by $8.5 billion to $34.9 billion in April. Exports decreased $1.6 billion to $12.0 billion, and imports decreased by $10.1 billion to $46.9 billion.
- The deficit with Mexico increased by $1.7 billion to $11.5 billion in April. Exports increased $0.3 billion to $27.8 billion, and imports increased $2.0 billion to $39.3 billion.
- Vietnam’s trade deficit was down to $9.8 billion in April from $10.4 billion in March but was the second biggest record trade deficit with Vietnam ever recorded.
- The deficit with Ireland rose to a record-breaking $6.03 billion in April from $4.9 billion in March.
For recent trade data visualizations, visit the CPA Trade Database.
For April, the only goods import that saw an increase was the automotive industry, likely due to backlogs caused by the semiconductor shortage in Taiwan and South Korea. Automotive vehicles, parts, and engines increased to $1.4 billion. Trucks, buses, and special purpose vehicles increased to $1.2 billion.
The main exported goods out of the U.S. all saw increases in April, led in part by oil and gas shipments to Europe and Asia. Mostly all of it is commodities, however.
Industrial supplies and materials increased to $2.3 billion, led by oil, natural gas, and metals. Soybean exports rose to $2.1 billion. Finally, capital goods exports increased to $1.2 billion overall, led by civilian aircraft.
Top Five Exports
|Pharmaceuticals||$6.67 billion||$7.53 billion|
|Industrial machinery||$5.99 billion||$6.02 billion|
|Semiconductors||$5.47 billion||$5.72 billion|
|Passenger cars||$4.63 billion||$4.37 billion|
|Car parts||$4.62 billion||$4.88 billion|
Top Five Imports
|Pharmaceuticals||$15.02 billion||$15.98 billion|
|Passenger cars||$13.63 billion||$13.74 billion|
|Cell phones||$12.01 billion||$12.28 billion|
|Car parts||$11.14 billion||$11.11 billion|
|Computers||$8.58 billion||$10.51 billion|
Worth noting, the dollar index rose steadily in April despite a slowing economy as money from abroad continues to chase U.S. dollar securities. An overvalued dollar remains one of the biggest impediments to balanced trade.
The below chart shows that the U.S. goods trade deficit is 23% greater than the same period a year ago.