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Trade soars past record from 2019, powered by imports for U.S. consumers, businesses
U.S. trade totaled a record $1.04 trillion in the first quarter, according to government data released Tuesday. That total is not only greater than the Covid-affected 2020 data but 3.26% above the record 2019 figure.
Despite that increase, there’s bad news for those poor souls who wring their hands and gnash their teeth over trade deficits.
For the first time, the U.S. trade deficit topped $200 billion in just the first three months of the year. In fact, it went flying by $200 billion. The total was $232.74 billion. The previous record was $195.33 billion in 2018.
Hold on though. If you are wringing your hands and gnashing your teeth over the U.S. trade deficit with China, by far the largest, well then there’s good news, sort of.
Although that deficit is up from 2020, when the coronavirus lockdown was hampering Chinese manufacturing, it is still lower than four of the five years prior to that.
While the U.S. deficit was $232.74 billion through March of this year, the U.S. deficit with China was $78.55 billion. That’s three times the size of the next largest U.S. deficit, with Mexico. In 2018, the China deficit had been more than four times greater than that with Mexico.
In 2018, the U.S. deficit with China was just under half the size of the U.S. deficit with the world. In the first quarter of 2021, it was equal to about one-third.
Why? U.S. exports to China are running at a record clip this year, up 35.13% from the first quarter of 2019 to $34.81 billion. Imports from China grew at a far slower pace, up 7.11% from 2019.
Consequently, Mexico is the nation’s top trade partner through the first three months of the year, followed by Canada and then China. That’s the same order as the last two years.
If you don’t wring your hands and gnash your teeth over deficits, or deficits with China, you recognize the data for what it is:
Confirmation that the enormous government spending begun by former President Trump, largely to combat the Covid-19 impact, and accelerating under President Biden, has created massive buying power for American citizens and businesses alike.
You might wring your hands and gnash your teeth over that, of course.
Proof?
Imports of the following are up more than $1 billion from the first quarter of 2019, before Covid-19:
● computers (establishing home offices),
● furniture (remodeling, construction boom),
● computer parts,
● sawed wood (construction boom with attendant price increase),
● electric storage batteries,
● refrigerators and freezers (remodeling, construction boom),
● exercise equipment (additional time in front of mirror at home),
● microphones and headsets (replacement of in-person meetings with Zoom, et al),
● video game consoles (locked at home, with some playtime undoubtedly on company time).
Taking a look at just one, computer imports, the data is compelling. Computer imports topped $25.7 billion in the first quarter, snapping the record set in 2012, nine years ago, with a 40.87% gain over 2020 and 35.08% increase over 2019.
Computers, which ranked as the nation’s sixth most valuable import in 2020 and fifth in 2019, ranked second to only passenger vehicles this year. Computers have not been the nation’s second-leading import in decades, if ever.
Looking at overall imports, they increased 11.74% over the first quarter of 2020 and a strong 6.30% over the 2019 totals for the same period.
U.S. exports, meanwhile, were up 1.89% from 2020 but down 1.18% from the first quarter of 2019.
Overall U.S. trade, while increasing 3.26 percent over the 2019 record first quarter, as mentioned, was up an even stronger 7.7% over the 2020 total.
How is the U.S. deficit increasing from 2019, if it is not increasing with China? The biggest increases are with Mexico, Canada, Vietnam and Switzerland, see here.
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