US March trade deficit at record high, imbalance with China jumps to US$36.9bBusiness | 4 May 2021 10:19 pm
The U.S. trade deficit hit a fresh record high in March as U.S. consumers flush with government cash spurred a continuing demand for foreign-made goods, CNBC reports.
With a new round of US$1,400 stimulus checks pouring in and the domestic economy continuing to show substantial improvement, the imbalance in goods and services with the rest of the world swelled to US$74.4 billion, the Commerce Department reported Tuesday.
That’s the highest level ever in a data series that goes back to January 1992, and represents a 57.6 percent increase from the same period a year ago and higher than the US$70.5 billion in February.
The trade imbalance with China increased by more than 22 percent to US$36.9 billion. The deficit with Mexico climebed by 23.5 percent to US$8.4 billion.
“Stimulus has kept American consumers spending through the pandemic, but restrictions on high-contact industries have diverted consumer spending from domestically produced services to goods, much of which are imported,” PNC senior economist Bill Adams wrote.
Exports actually increased for the month, rising US$200 billion or 6.6 percent. But that was offset by a continued demand for imported goods, which increased by 6.3 percent or US$274.5 billion.
The deficit has risen by nearly 10 percent in 2021 alone and has exploded from the US$47.2 billion level in March 2020, just as the U.S. was entering the early days of the coronavirus disease pandemic. Imports in 2021 have increased by 8.5 percent, while exports have fallen by 3.5 percent.
Adams said the shortfall is likely to decline in coming months as the recovery progresses.
“As the pandemic comes under control in the United States, American consumers will spend less on imported goods, shrinking imports; and foreigners will buy more U.S. exports as their economies recover further,” he said.
For March, imports increased the most in consumer goods, which increased US$4.5 billion, including a US$1.2 trillion rise in textile apparel and household goods. Industrial supplies and materials imports grew US$3.7 billion and capital goods were up US$3.3 billion.
Industrial supplies and materials led exports with a US$5.2 billion increase, while capital goods were up US$2.9 billion and consumer goods grew US$2 billion.