What’s Going On With The U.S. Trade Deficit?
On October 6, the U.S. Bureau of Economic Analysis announced that the nation’s goods and services deficit was $67.1 billion in August (a figure that was up $3.7 billion from $63.4 billion in July) and that, year-to-date, the goods and services deficit has increased $22.6 billion, or 5.7 percent,. Exports had declined $296.1 billion, or 17.6 percent, while imports decreased $273.5 billion (13.1 percent).
After several news outlets noted that the trade deficit was at its highest level since 2006, the Office of the U.S. Trade Representative took the unusual step of issuing a press release to counter that narrative.
Ambassador Robert Lighthizer said, “The trade data released today reflect the effects of the coronavirus on the U.S. and our trading partners. Basically, many of our partners were more negatively affected by the pandemic than we were. Indeed, the U.S. economy has outperformed every other G7 country.” U.S. GDP is down nine percent from a year ago, for example, while economic activity is down 21.5 percent in Britain, 18.9 percent in France, 13 percent in Canada, and 9.9 percent in Japan.
Ambassador Lighthizer also noted that:
- The United States’ year-to-date goods deficits is down with several trading partners, including Canada (-36.0 percent); Japan (-34.7 percent); China (-16.5 percent); the European Union (-7.7 percent); and Korea (-7 percent).
- The U.S. goods deficit is down 2.4 percent year-to date, and would have decreased by at least six percent if not for a large spike in gold imports “reflecting risk-hedging strategies during the pandemic, not underlying economics.”
- Average hourly earnings for production and nonsupervisory employees in the U.S. manufacturing industry rose by 11.4 percent between November 2016 and September 2020.
Click here to read the USTR’s full statement.