Falling exports helped push up trade deficit

May 2, 2024

The nominal US trade gap was unchanged at $69.4 billion in March after a revised gap in February showed a larger deficit. Both imports and exports fell during the month, by 1.6% and 2.0% respectively. In real terms, the trade deficit rose by slightly more, as reflected in the latest first quarter GDP report.

Imports fell 1.6%, or $4.3 billion, on a broad range of products as wholesalers drew down their inventories. Automotives posted the largest decreases that more than accounted for the drop in imports. The bulk of the decrease occurred in passenger cars. Industrial supplies fell on multiple categories including petroleum related products, aluminum, iron and steel. Though TSA throughput has been elevated, imports of services also fell on both travel and transport. 

The report continued to reflect the strength of the consumer. Retailers stocked up in March as imports of consumer goods jumped $3 billion. Most of that increase was in pharmaceuticals; however, there were substantial gains in household goods, appliances and furniture. 

Exports decreased by 2%, or $5.1 billion. Nearly all categories fell. The weakest areas were capital goods on civilian aircraft, industrial supplies and animal feeds. Consumer goods were mixed but also lost ground with luxury goods exports. Automotive were the only category that showed small gains as exports of cars and trucks just offset falling exports of parts, accessories and tires. 

In terms of detail by country and region, larger deficits were recorded with the EU and China while the deficit with Mexico shrank as imports fell. That fall from Mexico was likely due to the automotive sector and is unlikely to persist as companies continue to consider nearshoring production.