The US foreign trade deficit rose 4% to $ 90.6 billion in March, a new historical record, according to a recent US Census Bureau report. Imports increased 6.8% to a record $ 232.6 billion.
Exports also rose 8.7% to $ 142 billion in US sales in overseas markets.
The reason for the foreign trade deficit is that the US economy is recovering faster from the coronavirus crisis compared to its foreign trade partners, and thus foreign markets do not absorb the same amount of US products while the growing US demand in the US is increasingly supplied by imports.
With the recovery of US supply and the recovery of overseas markets (especially China, Europe, and Mexico), the imbalances in foreign trade may diminish. Nevertheless, the deficit will persist, as in previous years, as negative net exports have been a feature of the United States for decades.
However, since the US economy is not openly open, other factors can offset the large foreign trade deficit. The US economy, for example, grew strongly in the first quarter, despite a large deficit. First quarter GDP data will be released tomorrow.
We can write more about the impact of the foreign trade deficit on the US dollar here:
Cover photo: Getty Images
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