What a difference a month makes: just 30 days after the US posted the biggest trade deficit since the financial crisis, when the US trade balance was some $57.6BN against the US, moments ago the BEA reported that the US trade deficit plunged by a whopping $8.7 billion, dropping to $49BN, better than then $50BN expected, and the biggest monthly drop (in dollar terms) since the financial crisis.
According to the census bureau, the deficit decreased from a revised $57.7 billion in February to $49.0 billion in March, amid a perfect trade environment as exports rose and imports declined, or as Trump would say, “his policies to boost US trade worked.”
Broken down by category, the goods deficit decreased $7.5 billion in March to $69.5 billion. The services surplus increased $1.3 billion in March to $20.5 billion.
The good news: exports of goods and services increased $4.2 billion, or 2.0%, in March to $208.5 billion. Exports of goods increased $3.7 billion and exports of services increased $0.4 billion.
- The increase in exports of goods mostly reflected increases in capital goods($1.9 billion), in foods, feeds, and beverages ($1.0 billion), and in industrial supplies and materials ($0.9 billion).
- The increase in exports of services mostly reflected increases in maintenance and repair services ($0.1 billion), in travel (for all purposes including education) ($0.1 billion), and in transport ($0.1 billion).
Also good news, if only for GDP bean-counters: imports declined, decreasing by $4.6 billion, or 1.8%, in March to $257.5 billion. Imports of goods decreased $3.7 billion and imports of services decreased $0.9 billion.
- The decrease in imports of goods mostly reflected decreases in capital goods ($1.5 billion), in consumer goods ($0.9 billion), and in industrial supplies and materials ($0.7 billion).
- The decrease in imports of services mostly reflected decreasesin charges for the use of intellectual property ($0.9 billion) and in transport ($0.1 billion). Charges for the use of intellectual property for February included payments for the rights to broadcast the 2018 Winter Olympic Games.
Broken down by trading partner, the March figures showed surpluses with Hong Kong ($3.3BN), South and Central America ($3.1), United Kingdom ($1.2), Brazil ($0.8), and Singapore ($0.3).
Meanwhile, the countries that should be worried that they may fall in Trump’s trade war sights, and recorded deficit with the US in March, included China, of course, with a $35.4 billion deficit, but also the European Union ($12.4), Mexico ($7.0), Japan ($5.9), Germany ($5.0), Italy ($2.3), France ($1.5), OPEC ($1.4), India ($1.4), Taiwan ($1.3), South Korea ($1.2), Saudi Arabia ($0.3), and Canada ($0.2).
Finally, in case Trump needs some cheering today now that Stormy Daniels is back on the front pages, show him this chart of the US deficit excluding petroleum products: after hitting a record last month, it has rebounded dramatically in March, suggesting that whatever Trump is doing to boost overall trade (we already know US petroleum exports are soaring), may be working. Expect even more upward revisions to Q1 GDP, which however may lead to cuts for Q2 GDP as net exports were likely front-loaded.