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!"
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! #MAGA— Donald J. Trump (@realDonaldTrump) March 7, 2018
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)
- 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.