United States Trade Deficit Narrowed in 2019
According to the latest release from the United States (US) Census Bureau, the US trade deficit was US$616.8B for calendar year 2019, lower than the US$627.7B deficit in 2018 and the first time in six years that the US deficit shrunk. Contributing to the improvement in the trade balance was the reduction in the country’s import bill which was tempered by the decline in exports. The decline in imports mainly reflected lower imports of crude oil, computer accessories, telecommunications equipment and civilian aircraft engines. Exports, on the other hand, declined as a result of decreases in capital goods such as civilian aircraft and industrial supplies and materials. For the month of December 2019, the trade deficit was US$48.9B, up US$5.2B from US$43.7B in November.
The US trade balance improved largely as a result of the US/China trade, which saw successive tariffs being placed on Chinese goods and led to a reduction in the US’ import bill. Although trade tensions have eased, with the signing of phase one of the trade agreement, the level of uncertainty between the US and its other trading partners and outbreak of the coronavirus continues to be current downside risks which could negatively impact US’ exports in the short to medium term.