Trade Gap Jumped Nearly 12% as Pandemic Shut Down Economy

Cranes are used to take containers off of a cargo ship at the Port of Tacoma in Washington in November 2019. (AP Photo/Ted S. Warren, File)

(CN) — The U.S. trade deficit expanded by 11.6% in March, when the Covid-19 crisis forced lockdowns across the country and brought commerce to a grinding halt.

The difference between the goods and services the United States sells and buys from other countries rose to $44.4 billion in the last month of the first quarter, up from $39.8 billion in February.

The outbreak of Covid-19, the respiratory disease caused by the novel coronavirus, arrived in the U.S. in February but didn’t fully impact the economy until the following month. Statewide stay-at-home orders meant to slow the spread of the virus have capsized businesses and eliminated millions of jobs.

Exports to all countries dropped 9.6% to $187.7 billion in March — the largest monthly decline on record — and imports fell at a slower rate of 6.2% to $232.2 billion, according to a Commerce Department report released Tuesday.

Andrew Hunter, senior U.S. economist at Capital Economics, said the declines in both exports and imports were “driven by a collapse in international travel and tourism” and the next trade deficit report could see even worse numbers.

“With widespread factory closures and stay-at-home orders in place by the start of April, trade flows are likely to have fallen even further last month,” Hunter said.  

Joel Naroff of Naroff Economic Advisors also suggested the worst data is yet to come.

“We are already beginning to see the depths of the downturn that we are in and the most distressing April numbers have not even come out,” he said. “If you thought that it would be quick and easy, think again. This is going to be a very long process that should stretch through the summer.”

The U.S. exported fewer automobiles and barrels of petroleum in March, while imports of consumer electronics like smartphones dropped off as American unemployment surged during the crisis.

The closely watched goods deficit with China shrank by 21.3% to $15.5 billion. Imports from Beijing fell 14% to $23.3 billion and exports rose about 4% to $7.8 billion.

President Donald Trump has made closing the trade gap with China a top priority under his “America First” policy, saying the deficit is the result of bad deals by past administrations.

But after two years of trade wars, international commerce has been crushed by the Covid-19 pandemic and economies around the world are facing a recession.

There have been over 3.6 million confirmed Covid-19 cases worldwide, including 1.1 million in the U.S., and over 252,000 people across the globe have died, according to a Johns Hopkins University tracker. More than 69,000 Americans have been killed by the highly contagious disease as of Tuesday morning.  

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