Trade deficit up 4.8% to $71.1B in February

The U.S. trade deficit grew to a record $71.1 billion in February as a decline in exports more than offset a slight dip in imports, with severe weather taking much of the blame from analysts, who were expecting a slightly lower gap.

What happened

The February gap between what America buys from abroad compared to what it sells abroad jumped 4.8% above the revised January deficit of $67.8 billion, the Commerce Department said Wednesday.

The coronavirus pandemic has stifled global trade for more than a year, but those barriers appear to be falling as millions of people get vaccinated and countries start easing operating restrictions for businesses. Total trade after two months of 2021 is just 1.8% behind where it was at this point last year, before the global economy was blindsided by the pandemic.

What it means

The U.S. vaccine rollout, which so far as gotten at least one shot into the arms of more than 100 million Americans, is far ahead of other major global economies

in Europe and Asia. Should that trend continue, economists believe it will accelerate a return to “business as usual” and an even wider trade gap as the U.S. economy moves into high gear.

“The trade deficit is poised to widen as the U.S. recovery surges in the spring and summer,” said Oren Klachkin of Oxford Economics in a note to clients. “Better health conditions, reopenings, and fiscal stimulus will boost domestic demand and keep a strong pull on imports.”

What’s next

President Joe Biden and his team have been relatively quiet regarding his predecessor’s hard-line trade policies. Biden seems to be more focused on domestic policies so far and hasn’t called off former President Donald Trump’s trade war with China or suggested he would scale back tariffs on imported steel and aluminum.

BRIAN VAN DER BRUG/LOS ANGELES TIMES The U.S. merchandise-trade deficit widened to the biggest on record in February as imports fell from an all-time high and exports retreated by a larger margin.