The United States trade deficit rose by 11.6% from February to March, to $44.4 billion, according to a Commerce Department report released on Tuesday. Although both imports and exports decreased, exports saw the bigger fall. This reflects the state of the economy, both in the U.S. and abroad, as we grapple with Covid-19. We weren’t buying as many goods as we had previously, but the rest of the world was able to buy even less from us.
Imports saw a decline of 6.2%, to $232.2 billion. Exports registered a greater loss of 9.6%, falling to $187.7 billion, the lowest level since November 2016. A dive into the details paints a bleak picture.
Merchandise exports, which includes products such as aircraft, cars and car parts, and oil and petroleum products, slumped to $128.1 billion, reflecting the urgently low demand for oil and lack of travel. Car exports fell by 17.9%, while imports saw an 8.9% decline. Meanwhile, oil imports fell by 21.9% and exports shrank by 13.2%. Last month, the price of oil futures fell below zero for the first time in history as storage space ran low.
Travel into the country, technically considered an export in services, fell by 45.3% from February to March. This contributed to a 15.3% overall decline in service exports to $59.6 billion. The United States frequently has a surplus in trade in services.
Trade balances tend to be more of a symptom than a cause. In this case, these numbers are a reflection of national and international economic decline. Last week, first quarter US GDP showed a drop of nearly 5%, and came with plenty of warnings that Q2 will be even worse. Consumer spending (nearly two thirds of the United States economy) had fallen by 7.6%. Manufacturing was already contracting in March, then did a rollercoaster drop in April. Unemployment surpassed 30 million claims, more than wiping out all the gains made since the Great Recession in 2009.
This data was for March, when stay at home orders picked up towards the end of the month. April data will likely show an even larger contraction. Last month, the World Trade Organization warned that international trade could fall between 13% and 32% in 2020, hitting North America and Asia particularly hard. This is bad news for truckers. Multiple studies have shown that when imports and exports contract, it reduces the demand for trucking. Fewer goods to haul means less work available. The economic factors impacting the trucking market are wide and varied. However, at a time when truckload rates and volumes are struggling, reduced trade is likely a contributor.