The US goods and services trade deficit hovers near record level

The goods and services trade deficit is just above a record while the 3-month moving average did hit a new record in February.

Balance of trade data from Census Department, chart by Mish

Trade deficit summary

• The U.S. Census Bureau and the U.S. Bureau of Economic Analysis announced  the Goods and Services Trade Deficit.

• In January, the deficit hit a record $89.23 billion. For February, the deficit stands at $89.19 Billion. 

• The three-month average deficit is a record $86.79. 

• The services surplus peaked at $26.72 billion in January of 2018 and has generally been sliding since.

• For February, the services surplus is $18.29 billion.

Goods exports and imports 

• Exports of goods increased $2.8 billion to $158.8 billion in February.

• Imports of goods increased $1.7 billion to $266.2 billion in February.

Year-to-date 

• 2022 is off to a very bad start.

• Year-to-date, the goods and services deficit increased $45.7 billion, or 34.5 percent, from the same period in 2021. 

• Exports increased $68.0 billion or 17.6 percent. Imports increased $113.7 billion or 22.0 percent.

Notable countries

• Mexico: The deficit with Mexico decreased $2.7 billion to $9.8 billion in February. Exports increased$0.6 billion to $25.5 billion and imports decreased $2.1 billion to $35.3 billion.

• Japan: The deficit with Japan decreased $2.0 billion to $5.1 billion in February. Exports increased $0.9 billion to $7.1 billion and imports decreased $1.1 billion to $12.3 billion. 

• China: The deficit with China increased $7.9 billion to $41.2 billion in February. Exports increased $0.2 billion to $13.0 billion and imports increased $8.1 billion to $54.2 billion.

Trump's "historical trade deal" with China final results are a big zero

The results of President Trump's historical trade deal with China are in. 

Why perpetual deficits?

This setup is a direct result of 2 things.

1. US having world's reserve currency.

2. Nixon closing the gold window.

Perpetual trade deficits are why China does not want to have the world's reserve currency even if it met the requirements. The US is stuck with it, albeit in a now diminishing role thanks to de-globalization. 

The yuan will not replace the US Dollar

For discussion of the reserve currency and why we can rule out the yuan, please see The Yuan Will Not Replace the US Dollar, Nor Will It Be Backed by Commodities.

There is a huge difference between de-dollarization and de-globalization and loss of reserve currency status.

De-Globalization: New Supply Chains Are Inefficient and Will Drive Up Inflation.