US trade deficit jumps to $71.1 billion in February

SILVER SPRING, Md. — The US trade deficit grew to a record $71.1 billion in February as a decline in exports more than offset a slight dip in imports, with severe weather taking much of the blame from analysts, who were expecting a slightly lower gap.

The coronavirus pandemic has stifled global trade for more than a year, but those barriers appear to be falling as millions of people get vaccinated and countries start easing operating restrictions for businesses. Total trade after two months of 2021 is just 1.8% behind where it was at this point last year, before the global economy was blindsided by the pandemic.

The February gap between what America buys from abroad compared to what it sells abroad jumped 4.8 per cent above the revised January deficit of $67.8 billion, the Commerce Department said Wednesday.

The increase reflected a 2.6 per cent decline in exports of goods and services to $187.3 billion on a seasonally adjusted basis. That wiped out a 0.7 per cent decline in imports, which ticked down from January’s record high of $260.1 billion.

The February goods deficit of $88 billion, up from $85.2 billion in January, was also the highest on record. The $5 billion decrease in exports of goods was stoked by a $2.5 billion drop off in the capital goods category.

The February services surplus of $16.9 billion was the lowest since January of 2012, tripped up by a decline in exports of travel services. The US generally runs a big deficit in goods and a surplus in services such as travel and transport.

The year-to-date trade deficit after two months of 2021 is $138.9 billion, more than 68 per cent higher than the $82.4 billion for January and February of 2020.

The goods deficit with China grew 11.4 per cent from January to $30.3 billion in February, while the goods deficit with Mexico shrank 42.9 per cent from $11.9 billion to $6.8 billion.

President Joe Biden and his team have been relatively quiet regarding his predecessor’s hardline trade policies. Biden seems to be more focused on domestic policies so far and hasn’t called off former President Donald Trump’s trade war with China or suggested he would scale back tariffs on imported steel and aluminum.