By Steven L. Byers, PhD, CPA Senior Economist
The US trade deficit in goods and services for September 2019 fell 4.7 percent or $2.6 billion, to $52.5 billion, as imports declined more than exports.
The September decrease is due to a $2.7 billion decrease in the goods deficit, to $71.7 billion, and a decrease in the services surplus of $0.1 billion, to $19.3 billion. September exports were $206.0 billion, down 0.9 percent or $1.8 billion from August, while September imports were $258.4 billion, a 1.7 percent decrease of $4.4 billion from the August figures. Over the period January to September 2019, the US trade deficit totals $481.3 billion, up $24.8 billion or 5.4 percent over the same period in 2018. Exports decreased $7.0 billion in that time (0.4 percent), and imports have increased $17.8 billion, or 0.8 percent.
With respect to China, despite an overall, continuing deficit, there is some good news. The monthly goods deficit fell slightly. Year-to-date, the US goods deficit with China totaled $263.2 billion, down 12.8 percent from 2018. Exports were $78.8 billion, with imports at $341.9 billion. For September, the US-China deficit fell slightly, by $0.14 billion, to $31.6 billion. Exports to China decreased $0.8 billion, to $8.6 billion, and imports decreased $0.97 billion, to $40.2 billion.
According to press reports, the US and China have agreed in principle to the first of several parts of a multi-phase accord to end the trade dispute that has divided the world’s two largest economies. Phase one includes provisions for Chinese purchases of American agricultural products, rules to address currency manipulation, and intellectual property protections. Additionally, negotiators are pursuing a framework to roll back some existing tariffs.
There was improvement in the September trade deficit with Germany, to $4.8 billion, a decrease from August of $2.4 billion. Year-to-date, the US-Germany trade deficit has increased 1.1 percent, to $50.8 billion. With Christine Lagarde stepping into the role of head of the European Central Bank (ECB), the fate of the ECB asset buying program, often referred to as “quantitative easing,” will face renewed scrutiny. German officials have resisted the program and the German government is opposed to using fiscal stimulus to fight economic downturns. Fiscal stimulus in Germany and other surplus EU nations would benefit US exports.
With regards to other major trading partners, the trade deficit year-to-date with the EU widened 9.9 percent, to $133.0 billion. America’s goods deficit with Japan widened 8.2 percent, to $53.7 billion. The September deficit with South Korea widened 22.0 percent, to $15.9 billion. For India, the deficit widened 10.0 percent, to $17.9 billion, for Canada it was up 17.4 percent, to $17.0 billion, and for Mexico it rose 28.8 percent, to $76.1 billion.
Exports of agricultural commodities increased $192 million over the revised August figure, but are $4.0 billion lower on a year-to-date basis compared to a year ago. Within the major agricultural commodities there were winners and losers. Soybean exports decreased in September by $1.04 billion, but year-to-date they are $2.6 billion ahead of 2018 exports. Exports of wheat were down $36 million from the previous month but rose on a year-to-date basis, to $882 million. Corn exports decreased $164 million in September but were down $3.5 billion year-to-date from 2018. Exports of dairy products were up slightly by $21 million in September and are also up slightly from the 2018 year-to-date figure.
For some major categories of imports, the year-to-date picture is mixed. Telecommunications equipment imports fell sharply by 18.2 percent, to $46.2 billion. Civilian aircraft imports rose 16.7 percent, to $10.6 billion, and automobile imports rose 3.9 percent, to $134.6 billion. Pharmaceutical imports continue to surge, up 13.6 percent, to $111.9 billion.
With many Boeing planes grounded worldwide following two crashes of their 737 Max airliner, monthly exports of civilian aircraft rose in September by $659 million over August. Year-to-date however, exports are down $7.2 billion or 17.5 percent.