Fuel For The Protectionist Fire: US Trade Deficit Surges, Ex-Petroleum At All Time High

Coming at a time of heightened trade tensions and fears of an imminent trade war, for once every trader was looking at this morning's international trade report to see if it will pour more fuel on the trade war fire. It did, because according to the BEA, in January the US trade deficit surged 5% to $56.6 BN from $53.9BN in December, worse than the $55.0BN expected, and the biggest deficit going back to 2008.

In January, imports were little changed in Jan. at $257.51b from $257.51b in Dec, while exports fell 1.3% in Jan. to $200.91b from $203.61b in December.

The report came just hours after Trump once again slammed the US trade deficit, tweeting that "From Bush 1 to present, our Country has lost more than 55,000 factories, 6,000,000 manufacturing jobs and accumulated Trade Deficits of more than 12 Trillion Dollars. Last year we had a Trade Deficit of almost 800 Billion Dollars. Bad Policies & Leadership. Must WIN again!"

Looking at the breakdown, first exports:

  • Exports of goods and services decreased $2.7 billion, or 1.3 percent, in January to $200.9 billion. Exports of goods decreased $3.0 billion and exports of services increased $0.3 billion. The decrease in exports of goods mostly reflected decreases in capital goods ($2.6 billion), in industrial supplies and materials ($1.3 billion), and in other goods ($1.0 billion). An increase in consumer goods ($1.2 billion) partly offset the decreases.
  • The largest increase in exports of services was in charges for the use of intellectual property ($0.1 billion). The only decrease was in maintenance and repair services ($0.1 billion)

Then imports:

  • Imports of goods and services decreased less than $0.1 billion, or less than 0.1 percent, in January to $257.5 billion. Imports of goods decreased $0.2 billion and imports of services increased $0.2 billion. The decrease in imports of goods mostly reflected decreases in capital goods ($1.3 billion) and in consumer goods ($0.9 billion). An increase in industrial supplies and materials ($2.0 billion) partly offset the decreases.
  • The largest increase in imports of services was in other business services ($0.2 billion), which includes research and development services; professional and management services; and technical, trade-related, and other services. The largest decrease was in travel (for all purposes including education) ($0.2 billion

Jan. crude oil imports increased to $13.19b from $11.15b last month, representing 74.8% of total petroleum imports, Commerce Dept. said

What was more troubling than the growing headline number deficit, however, is that the "core" US trade balance remained at all time high, or $49.52BN.

Finally, according to the BEA, the January figures showed surpluses with:

  • Hong Kong ($2.6),
  • South and Central America ($2.4),
  • Singapore ($0.9),
  • Brazil ($0.5),
  • and United Kingdom ($0.3).

Meanwhile, deficits were recorded with:

  • China ($35.5),
  • European Union ($15.0),
  • Germany ($6.3),
  • Mexico ($5.6),
  • Japan ($5.6),
  • Italy ($2.8),
  • OPEC ($2.5),
  • India ($1.8),
  • Taiwan ($1.5),
  • Canada ($1.5),
  • South Korea ($1.5),
  • France ($1.4),
  • Saudi Arabia ($0.6).

Of note, the deficit with China increased $1.5 billion to $35.5 billion in January. Exports decreased $1.3 billion to $10.5 billion and imports increased $0.2 billion to $46.0 billion.

The deficit with the European Union decreased $2.1 billion to $15.0 billion in January. Exports decreased $0.4 billion to $24.7 billion and imports decreased $2.5 billion to $39.7 billion.

And while the trade number not only indicates that Q1 GDP estimates are about to be cut below 2.0%, it confirms that a trade war is now more or less assured.



BaBaBouy Wed, 03/07/2018 - 08:52 Permalink

You wanna STOP the trade deficit, Start making BETTER and CHEAPER products and the rest of the world will BUY.

The other factor is SIMPLE ~ the USD is way too high, STOP Fucking with the Paper GOLD Shorting, and  the  lower USD will make all products more  competitive worldwide! 

east of eden BaBaBouy Wed, 03/07/2018 - 08:59 Permalink

Yes. But Trump is a hoodlum, a 'mob boss', who relies on threats and nothing more.

As has been pointed out repeatedly, his tariffs on steel and aluminum will cost him 4 million jobs a year, while only benefitting the 'owners' of US steel and aluminum companies, not necessarily their employees (total employment in steel and aluminum = 300K jobs).

So really, what he is doing is just greasing the skids for the 1% EVEN MORE.

In reply to by BaBaBouy

fx directaction Wed, 03/07/2018 - 09:11 Permalink

" The other factor is SIMPLE ~ the USD is way too high, STOP Fucking with the Paper GOLD Shorting, and  the  lower USD will make all products more  competitive worldwide!  "


Haha, good one! A lot of the stuff the US imports will have to be imported almost regardless of the price. So an ever weaker $ actually adds more to your import bill and most likely adds more  than what you will could ever gain via increased exports.

The $ fell a lot over the past 18 months and at the same time, US oil production rose (which reduces the amount of imported oil, the single most important item among imports). That should have vastly reduced the trade deficit according to your logic. But what happened to the trade deficit in reality? It soared!! Explain that, genius.


But yeah, a cheaper $ will solve the structural problem of the US economy .


In reply to by directaction

GUS100CORRINA fx Wed, 03/07/2018 - 10:35 Permalink

Fuel For The Protectionist Fire: US Trade Deficit Surges, Ex-Petroleum At All Time High

My response: Headline above says it all!!!! By the way, this is NOT about making cheaper products in America. What it is about is foreign governments like CHINA subsidizing their industries in the short term in the hope that it will drive American business "OUT OF BUSINESS"!

We need to think about one fact: When your nation no longer manufactures steel or aluminum or any other product, your nation is now held hostage to other nations.


May GOD BLESS, GUIDE and PROTECT President TRUMP and his team.

Going forward, if we want long term, strategic changes that are in America's best interest, we need to VOTE "OUT OF OFFICE" every single DEMOCRAT and RINO in the upcoming 2018 midterm elections.

Choose wisely America for the days are EVIL.

In reply to by fx

jin187 GUS100CORRINA Wed, 03/07/2018 - 13:55 Permalink

I agree with you, but his opponents aren't lying about the economic impact.  While it's true that we are held hostage by other nations by not producing our own resources, that train already left the station the day NAFTA was signed.  To suddenly revert to depending on US production would break the economy as it is now completely, and cause at least 10-15 years of economic misery the likes of which this country has never known.  The reason we're in this situation now is because the ignorant, apathetic American voter, doesn't think past the tip of their their cock when making political decisions.  No one has ever gotten elected by asking the voters to support a plan that will benefit their grand kids by imposing suffering on themselves.  If Trump tries to revert the economy to production all at once, his changes won't survive his 2nd term, if he even gets one, and whatever globalist promising bread and circuses that ends up replacing him, will change it all back in a heartbeat.

In reply to by GUS100CORRINA

Honest Sam east of eden Wed, 03/07/2018 - 09:06 Permalink

I didn't realize there were people here who look at the actions of high profile politician and believe them, without question, and from that make predictions that even god can't foresee.

The processes of inductive and deductive reasoning, factoring in unspoken motives, intentions, and strategeries is lost on the knee jerks, like you.

Yes, SOME 1%'ers will benefit from some actions and others will lose. But if this results in renegotiated international agreements fairer to U.S., and its peeps, this 'hoodlum', will be a shoo-in in 2020.

If the markets are any indication, which is dubious at this point, of where the people are headed, then a less than 1% decline overnight is signalling a big fat yawn.

In reply to by east of eden

silverer east of eden Wed, 03/07/2018 - 09:58 Permalink

Everything will get fixed in WWIII. That's what incompetent governments do. When the population runs out of ideas to keep making things work because the government takes all their money and creates obstacles to further progress, they just blame a boogeyman and launch a major war. At the end of WWIII, the survivors will be stupid and swallow the "we will rebuilt our country and blah, blah, blah" speech. It's a wash, rinse, repeat system that makes bankers and elites rich.

In reply to by east of eden

Clint Liquor BaBaBouy Wed, 03/07/2018 - 09:06 Permalink

‘Trade Deficit’ is an oxymoron. By definition, there no such thing as a trade deficit. They send their labor, materials, and manufacturing capacity, we send them debt backed by currency created from thin air. No budget deficit, no need for a trade deficit.

In reply to by BaBaBouy

silverer BaBaBouy Wed, 03/07/2018 - 09:48 Permalink

When Obama was in office, he signed an executive order to increase US exports. Voila! US Commercial Services is here. Sounds like you'd get "service", eh? I checked into it and got on the mailing list. Even went to a couple of hosted meetings. They are well attended by banks and people in educational circles (already on a salary). Turns out if you want to export, you've got to put the government first. Sign up for "training and info" classes (just a few hundred bucks) so can learn how to be "in compliance". Spend two to three days in the classes at your expense. Generally you are flying to another state, and US gov spares no expense on their behalf, so get ready to pay $219.00 a night for your room in the hotel they picked. Then you can sit and be intimidated with all the rules and regulations you must pay for and adhere to so you can export your product. Your "partner" is the US gov, ready and willing to confiscate your shipments if you fill out paperwork improperly or don't observe all the regulations, even if it was not your intention to screw up. Learn about laws. Learn about fees. Learn about when offices are closed when you need them. Learn about how you can't be competitive overseas once you add the additional overhead of managing your exports. Then get cool emails from Commercial Services. For the first couple of years, half the links in the emails directing recipents to registration or info sites ended up on a 404 page. One was actually flagged by my anti-virus software as containing malicious content. Finally, you will learn about how much of a dumb ass you were to even try. This game is for the big boys with deep pockets only.

In reply to by BaBaBouy

hazardfish BaBaBouy Wed, 03/07/2018 - 10:58 Permalink

Ugh wow talk about dumb. BaBaBouy  How about Trump use the same trade tactics as China? You do realize China is at war on trade and has been for nearly 20 years right? Setting their currency artificially low, dumping products on world markets, not opening up their own markets to foreign companies, no sir you are very very wrong. China does not deal with us in a fair and open market, everything regarding trade with China is insanely corrupt and ONLY in their favor. 

You can produce all the cheapest most amazing widgets you want, but China will simply dump theirs below cost to maintain market share. Your point of view is really silly and uninformed. 

In reply to by BaBaBouy

fx Wed, 03/07/2018 - 08:54 Permalink

Trump / Mnuchin have talked down the $ for the past 12 months , while the US economy for decades has imported vast quantities of stuff. Now they complain about a widening trade deficit and want to fight said deficit with tariffs.

Never mind that the weaker the $, the higher the import bill gets. And structurally, the US economy isn't capable of ramping exports sufficiently to compensate for the soaring $ value of imports.

You really can't make this stuff up. Trump is a clueless moron when it comes to macoroeconomics, but of course as usual he is pretending to know more about it than everybody else combined.


east of eden Wed, 03/07/2018 - 08:56 Permalink

Look. This is very simple.

Trump has to create JOBS, not TAXES. Unless and until he does that, any foolishness about RAISING taxes on consumptive goods (tariffs) will do nothing except shift the trade deficit to the fiscal deficit. In other words, a gain of net zero.

gaoptimize Wed, 03/07/2018 - 09:04 Permalink

Can I ask, dear fellow Zerohedgers, for you to think about the money creation as well as the flows between countries?  Let's say I create or borrow $1T of money in an economy that is producing just slightly more goods and services as the year before.  After the money changers take their cut, you still expand M2.  There is going to be inflation, and the money is going to chase goods and services wherever they can be found at the lowest price.  Of course there is going to be a trade deficit!

Stop the borrowing, stop the money printing (End the Fed), save a bit more, and the trade deficit will solve itself.

Everybodys All… Wed, 03/07/2018 - 09:05 Permalink

Bush and Obama doubled our national debt under each and did nothing to try to invigorate the US economy. That's why we are sitting in this mess. Give Trump some credit for at least addressing the problem. These other mfers didn't have the courage or fortitude.

fx Everybodys All… Wed, 03/07/2018 - 09:20 Permalink

" Bush and Obama doubled our national debt under each and did nothing to try to invigorate the US economy. That's why we are sitting in this mess. Give Trump some credit for at least addressing the problem. These other mfers didn't have the courage or fortitude. "


Oh really? What for? For creating the next additional 1tn $ revenue deficit with his ill-timed tax cuts?

When Trump ran for office and upon reading his book (MAGA) I actually thought he would indeed adress core problems. But what did he do? In many ways just the same as Obozo and GWBush, actually. namely, increasing fiscal stimulus and ignoring the rising budget deficit that would be the inevitable result.

Trump wrote and spoke at lengths about how important it was to reduce the deficit and the national debt but here he is in the WH and does the exact opposite. And actually, GWB and Obozo did it in times of crisis. Trump stimulates while the economy has been quite strong already. Imho one of the dumbest fiscal stimulus programmes ever done, form a timing point of view.

Give him credit? For what, exactly?

In reply to by Everybodys All…

Mike in GA fx Wed, 03/07/2018 - 10:23 Permalink

Completely agree with your points.

We have a systemic problem:  Politicians do not "cut", they spend.  Reelection and all that, you know.

Any politician who tries to cut anything is not even given a hearing out of committee.  The President can't line-item-veto a budget that doesn't exist.  There is NO discipline amongst our ruling elites.

They all know - as do we - you have to dance as long as the music's playing.  That way, when the debt bomb implodes, EVERYONE gets blamed, not just one perp.  

Trump is doing a lot quite singlehandedly now.  Balancing a non-existent budget would require the political support of the same groveling group of ball-less, spineless politicans and deep staters that are trying to deligitimize him 24/7.

I blame the system those same bastards have built for themselves.  Civis emptor.


In reply to by fx

small axe Wed, 03/07/2018 - 09:32 Permalink

these are the numbers of a country in precipitous decline. This is the legacy of Gary Cohn and the rest of the global parasites. And yet somehow we're told that Cohn and his cohorts are fine upstanding patriots with the best interests of the nation at heart ... laughable.

IronForge Wed, 03/07/2018 - 09:36 Permalink

Tariff away!

Next, Call Centers and Medical Practice and Admin.


If they want to sell here, they should have to build here or pay Tariffs.that.encourage.them.to.do.so.

bigloser Wed, 03/07/2018 - 11:30 Permalink

Axe the entire Dept. of Education. Send it to the states, or, better yet, allow vouchers for private schooling.

School taxes are killers. Public employees are leeches.

Smaller government. I don't care where they start (though the DOE is my fav), governments need to start cutting, NOT like in West Va., where they just caved to the public unions, which should be outlawed.

jin187 Wed, 03/07/2018 - 13:39 Permalink

International trade as it is now does only one thing, and that's redistribute wealth from the USA to other countries.  What diminished wealth that comes back from those other countries ends up in the hands of the elites, which use their fortunes to encourage more international trade, creating a death spiral.  The USA is the most climate diverse and resource diverse country on the planet.  We can produce everything from coconuts to uranium with no need for international trade.  The problem is that US workers would demand that a fair share of the wealth of these production operations go to them in exchange for their labors, and that doesn't fly for big oil, big steel, big agriculture, and other parasites of global trade.

Unfortunately, we've become so invested in international trade, that suddenly cutting it off would cause nothing short of a great depression.  Setting the ship right by getting American workers making American products out of American resources would destroy the economy short and medium-term.  Long-term, what would happen is those American workers would use their increased wages to pay for the more expensive American products and services, but at the start, the wage-depressed welfare class wouldn't be able to afford it, and the companies would have no one to sell to, basically forcing everything to start over again from scratch.

The funny thing is that in the really long-term, globalism works too.  My only issue with it is how long do the technologically superior and resource rich nations of the world have to handicap themselves, and throw money into the 3rd world blackhole before they catch up, and we can have an even playing field again.  Cutting off international trade would probably cause 15-20 years of depression in this country, and God knows how much misery in the 3rd world.  Not doing so may result in hundreds of years of forcing the working class to prop up up both the globalist elites, and the 3rd world.

The political ramifications are pretty profound as well.  China is essentially being kept in line right now because it needs to maintain trade with the west to prop up its terrible economic policies.  As long as we're providing jobs, they don't have to.  If that were to end, they'd have no real deterrent from being the worst of actors, and may very well invade places like Taiwan and the Philippines simply because the only thing they have to fear is armed intervention, and that isn't likely to come from the USA and Europe with their economies in the tank.  We'd pretty much be handing the keys to China to become the world's foremost superpower, and that might not end well.  Russia may very well become China's top rival at that point, and that could end up even worse.