US trade deficit hits record as goods imports surge
The gap in goods and services trade grew 22.3 percent to $109.8 billion
THE US trade deficit widened to a record in March, reflecting a surge in imports as companies relied on foreign producers to meet solid domestic demand.
The gap in goods and services trade grew 22.3 percent to 109.8 billion, Commerce Department data showed. The median estimate in a Bloomberg survey of economists called for a 107.1 billion deficit. The figures aren’t adjusted for inflation.
In the first quarter, the widening of the trade deficit largely explains the economy’s worst performance since the pandemic recovery, with gross domestic product shrinking at a 1.4 percent annual pace. That’s because the value of products American businesses and consumers bought from overseas outpaced purchases of US goods and services by other economies.
Net exports subtracted 3.2 percentage points from firstquarter GDP, government figures showed last week.
An improvement in the trade shortfall any time soon will be difficult as U.S. demand exceeds economic activity in many other nations. Severe lockdowns in China to curb the spread of Covid-19 further complicates the trade picture. Activity at some ports slowed sharply, further straining already-tenuous global supply chains.
The value of imports of goods and services rose 10.3 percent in March to 351.5 billion and exports increased 5.6 percent to 241.7 billion. Both values were records.
US merchandise imports grew 12 percent to a record
298.8 billion, reflecting a surge in the value of industrial supplies that include petroleum. Energy prices rallied in the month after Russia’s invasion of Ukraine. Imports of consumer goods, capital equipment and automobiles also increased.
On an inflation-adjusted basis, the March merchandise-trade deficit widened 18.9 percent to a record 137.8 billion.
A strong American consumer is likely to support continued demand for imports, while slower recoveries among US trading partners could hold down export growth, economists say.
“The prevailing domestic and overseas economic environment could keep the deficit pinned near record levels and impose a significant headwind to US GDP growth,” said Mahir Rasheed of Oxford Economics.
The Federal Reserve is raising interest rates as it grapples with accelerating inflation, which could tamp down demand.
In the first three months of the year, the goods and services deficit increased 84.8 billion, or 41.5 percent, from the same period in 2021, the report said.
“However, we expect aggressive policy tightening (and) somewhat softer domestic demand growth to cool import growth and allow the deficit to stabilize,” Rasheed said.
Even with the ongoing COVID-19 lockdowns in China, which raised fears of increasing difficulties sourcing products, the trade gap with the world’s number two economy jumped 7.4 billion to 48.6 billion, the report said.
The deficits with Vietnam and Taiwan were the highest ever, according to the data.