Category Archives: trade

The Largest U.S. Trade Deficit in U.S. History

In March 2022, the United States imported far more goods than it exported, breaking its previoius record for its monthly trade deficit by a wide margin. We thought the occasion of the new record provided an interesting data visualization opportunity, so let's start with the overall summary:

The Largest Monthly Trade Deficit in U.S. Histsory, March 2022

The U.S. exported $179.5 billion worth of goods in March 2022, while importing $297.0 billion. That makes for a monthly trade deficit of $117.5 billion, which is 14.2% larger than the previous record of $102.9 billion set in November 2021.

Because we regularly follow trade between the U.S. and China, we broke out the portions of each of these categories that are attributable to that portion of the U.S.' overall trade with respect to the rest of the world. We find that U.S. exports to China accounted for 7.5% of that total. U.S. imports from China accounted for nearly 16.0% of all it imported from around the world. Netting these numbers out, we find that the U.S.' trade with China accounted for 28.9% of its entire recorded trade deficit in goods for the month.

We decided to dig deeper into the U.S. Census Bureau's trade data to see what it was that added the most to the U.S.' record high trade deficit in March 2022. Those results are presented in the following interactive chart, for which you may need to click through to our site to get the big picture. Hover your cursor over the dots in the chart to get the related surplus (+) or deficit (-) in millions of U.S. dollars.

The biggest portion of the U.S.' record March 2022 trade deficit was in the category for electric machinery. The second largest portion was for heavy mechanical machinery. (Note: nuclear reactors are included in the title for the official category, but this particular class of goods was a very small contributor to the U.S.' trade deficit in March 2022!) The third largest category covers vehicles, which is mostly accounted for by imports of foreign-made automobiles and trucks. The large number of imports recorded during the month may be attributable to progress finally being made in unloading the backlog of large container ships that queued up in large numbers outside U.S. seaports during 2021.

References

U.S. Census Bureau. Trade in Goods with World, Not Seasonally Adjusted. Last updated: 4 May 2022. Accessed 4 May 2022.

U.S.-China Trade Growth Slows in March 2022 Ahead of Shanghai Lockdown

After surging in February, the growth rate of U.S. exports to China slowed to single digits in March 2022. At the same time, the year-over-year growth of U.S. imports from China also slowed, but not as much as U.S. exports did.

But none of that takes China's new COVID lockdowns in its largest trade hub of Shanghai into account, which was imposed by China's government on 28 March 2022. That lockdown is projected to continue well into May 2022.

That means our chart tracking the recovery of trade between the U.S. and China following the initial phase of the coronavirus pandemic in 2020 is uniquely capable of assessing the impact of China's Shanghai lockdown will have on that recovery. That's because right now, it shows no impact from China's new lockdown, while the trailing twelve month average (the heavy black line) of the combined value of goods traded between the U.S. and China is starting from a point that's narrowed to fall within a small gap of our projection of what that recovery would look like without China's continuing zero-COVID lockdown policies.

Combined Value of U.S. Exports to China and U.S. Imports from China, January 2017 - March 2022

That narrowing is an unexpected bonus in that regard, since we had anticipated the gap between the actual trailing year average and the counterfactual would open slightly wider following February's exceptionally strong year-over-year gain.

The impact of the Chinese government's lockdown of Shanghai is already being felt in U.S. ports through shipping delays.

Those delays are developing at the same time U.S. ports are making progress in unloading the backlog of container ships inbound from China, which the Biden administration had allowed to develop and fester in 2021. We're excited to see how these factors might alter the trajectory of trade captured in our chart.

References

U.S. Census Bureau. Trade in Goods with China. Last updated: 4 May 2022. Accessed 4 May 2022.

U.S. Exports to China Lifts Trade Trajectory

U.S. exports lifted the trajectory of trade between the U.S. and China in February 2022.

Year over year, the value of those exports surged by 22% overall, with a third of the increase represented by agricultural goods, including cereal grains, soybeans, and cotton. The single biggest growth category however was pharmaceutical products, which accounted for 19% of the year over year gain and makes sense given China's continuing problems with coronavirus infections. Exports of U.S. mineral fuel oils also increased significantly in the year over year measure, with much of the remaining increase spread over multiple categories.

We should also note that much of the year over year gains resulted because February 2021 had seen an unusually low level for U.S. exports to China. That volatility can be seen in the following chart tracking the trailing twelve month average of the combined value of that trade as the heavy black line, where the counterfactual is shown by the dashed red line. We're using the trailing twelve month average to account, in part, for the seasonality in the actual monthly data, which we've shown as the thinner purple line.

Combined Value of U.S. Exports to China and U.S. Imports from China, January 2017 - February 2022

Much as February 2021's trade level between the U.S. and China was unusually low, March 2021's trade level was unusually high, so we anticipate the gap between the actual trajectory of U.S.-China trade and our counterfactual will open up when March 2022's data becomes available.

References

U.S. Census Bureau. Trade in Goods with China. Last updated: 5 April 2022. Accessed 5 April 2022.

Signs of Stalling Growth for Earth’s Economy

The pace at which carbon dioxide is increasing in the Earth's atmosphere slowed significantly according to data recorded at the remote Mauna Loa observatory for March 2022. The following chart shows the latest development for the trailing twelve month average of year-over-year change in the atmospheric concentration of carbon dioxide:

Trailing Twelve Month Average of Year-Over-Year Change in Parts per Million of Atmospheric Carbon Dioxide, January 2000 - March 2022

That change interrupts what had been a robust upturn in CO₂ emissions, driven primarily by China's record coal spree in recent months. The new change however coincides with indications that China's economic growth has sharply slowed in 2022, as indicated by its negative year-over-year growth rate for imports from the United States for December 2021 and January 2022.

Year Over Year Growth Rate of Exchange Rate Adjusted U.S.-China Trade in Goods and Services, January 1986 - January 2022

That reduction is attributable to China's ongoing struggle with COVID-19, which disrupted economic activity in the Earth's biggest emitter of carbon dioxide in both December 2021 and January 2021. Allowing for the lag in China's carbon dioxide emissions to diffuse into the Earth's air, we think that economic slowdown is now showing up in March 2022's atmospheric CO₂ measurements. With China's government still committed to its COVID-zero policies and still locking down millions of China's productive population for weeks at a time as coronavirus infections continue to spread in the country despite its measures, we anticipate reduced carbon dioxide emissions will show up in the Earth's air from the world's biggest carbon emitter over the next several months.

National Oceanographic and Atmospheric Administration. Earth System Research Laboratory. Mauna Loa Observatory CO2 Data. [Text File]. Updated 7 March 2022. Accessed 9 March 2022.

U.S.-China Trade Growth Recovery Underperforming "Great Recession"

Having closed the door for assessing the performance of the January 2020 'Phase 1' trade deal between the U.S. and China, we've refocused our ongoing trade analysis to focus on the trade recovery from 2020's coronavirus pandemic.

To do that, we need to compare the actual trajectory of the trade between the U.S. and China with a counterfactual - a projection of what the future for trade could reasonably look like following a recession. For our purposes, we opted to model a counterfactual after the recovery in trade between the U.S. and China that followed the so-called "Great Recession". The following chart shows the trailing twelve month average of the combined value of that trade as the heavy black line, where the counterfactual is shown by the dashed red line. We're using the trailing twelve month average to account, in part, for the seasonality in the actual monthly data, which we've shown as the thinner purple line.

Combined Value of U.S. Exports to China and U.S. Imports from China, January 2017 - January 2022

Going by the trailing twelve month average of the combined value of goods exchanged between the U.S. and China, the recovery in trade between the two countries began after this measure bottomed in September 2020. In the first ten months since, up to July 2021, the rate of growth of trade outperformed what was observed in the recovery following the "Great Recession". But since July 2021, the level of trade has consistently underperformed the Great Recession trade recovery. In January 2022, it would take an additional $1.2 billion of goods traded between the two countries to match that earlier recovery.

In truth, that underperformance took hold several months earlier, following March 2021, after a spike in the value of goods traded between the two countries was recorded. This period roughly coincides with a growing backlog of container ships at the U.S.' west coast ports, and specifically at the ports of Los Angeles and Long Beach in southern California. These two ports typically account for 40% of all imported goods processed into the U.S. economy, where congestion at these two ports built up and was allowed to fester for months without any action to correct the worsening situation by the Biden administration.

The good news is that after months of neglect, the Biden administration was finally forced to take steps to address the problem. There are indications the worst of the trade congestion at these two ports is in the rear view mirror.

That's a positive development, which we see in the small narrowing of the gap between the counterfactual and the actual trajectory of the U.S.-China trade level in January 2022. We'll see how well that progress might continue in the months ahead.