Coronavirus Economy: US Trade Deficit Grows In March As Both Imports And Exports Fall

The U.S. trade deficit in March rose 11.6% from February as both imports and exports fell amid the coronavirus pandemic, which virtually shut down the world’s economy, the Commerce Department reported Tuesday.

The World Trade Organization predicted a 13% to 32% drop in global trade for 2020 as the pandemic persists, with the sharpest drops to be experienced in North America and Asia. The projected decline is much bigger than that during the 2008-09 Great Recession.

The Bureau of Economic Analysis reported the deficit stood at $44.4 billion compared with a revised $39.8 billion in February. Exports fell 9.6% to $187.7 billion while imports fell 6.2% to $232.2 billion.

“The declines in March exports and imports were, in part, due to the impact of COVID-19, as many businesses were operating at limited capacity or ceased operations completely, and the movement of travelers across borders was restricted,” the report said, noting the full impact cannot yet be assessed. The numbers account for just the first two weeks of actions that shut down the U.S. economy.

March exports fell by $20 billion, with imports falling $15.4 billion. The deficit in goods and services increased $4.6 billion to $65.6 billion. The services surplus fell $100 million to $21.2 billion.

“It’s safe to project that April will see a much bigger fall and there’s not likely to be a significant recovery in May,” Brad Setser, a senior fellow at the Council on Foreign Relations, told the Wall Street Journal.

Exports of goods fell $9.2 billion to $128.1 billion, with crude oil leading the way, falling $1 billion, and other petroleum products falling $900 billion. Automotive vehicles, parts and engines fell $2.5 billion, and capital goods posted a $2 billion decrease.

Exports of services fell $10.8 billion to $59.6 billion, with travel off $7.5 billion.

Imports of consumer goods were off $4 billion.