SILVER SPRING, Md. – The U.S. 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 February gap between what America buys from abroad compared to what it sells abroad jumped 4.8% above the revised January deficit of $67.8 billion, the Commerce Department said Wednesday.
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 U.S. vaccine rollout, which so far as gotten at least one shot into the arms of more than 100 million Americans, is far ahead of other major global economies in Europe and Asia. Should that trend continue, economists believe it will accelerate a return to “business as usual” and an even wider trade gap as the U.S. economy moves into high gear.
“The trade deficit is poised to widen as the U.S. recovery surges in the spring and summer,” said Oren Klachkin of Oxford Economics in a note to clients. “Better health conditions, reopenings, and fiscal stimulus will boost domestic demand and keep a strong pull on imports.”
The higher trade deficit in February reflected a 2.6% decline in exports of goods and services to $187.3 billion on a seasonally adjusted basis. That wiped out a 0.7% 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 dropoff 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 U.S. 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% higher than the $82.4 billion for January and February of 2020.
The goods deficit with China grew 11.4% from January to $30.3 billion in February, while the goods deficit with Mexico shrank 42.9% 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.