US trade deficit rises 9.7% in May to $54.6 billion

Daniel Fowler
July 3, 2020

"The declines in exports and imports that continued in May were, in part, due to the impact of COVID-19, as many businesses were operating at limited capacity or ceased operations completely, and the movement of travelers across borders was restricted", the department said.

Both exports and imports fell as the coronavirus outbreak continued to take a toll on world commerce.

Exports from the USA fell 4.4% to $144.5 billion, a Commerce Department report showed on Thursday. Total trade remains 29% below February's level.

"Overall, the narrowing in the trade deficit is welcome, but with exports and imports still both down by roughly one-third from a year ago, this is only the first baby step along the road to recovery", Paul Ashworth, chief North America economist at Capital Economics, said in a report.

Year-to-date, imports are down $1.25 billion to around $10.22 billion.

"We've got this enormous fall in services trade which maps to a slowdown globally centered around services", said economist Brad Setser, a senior fellow at the Council on Foreign Relations.

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"Other policies of the government for diversification of exports and global markets will enable us to continue the thrust in the current fiscal year as well", he said.

The United States' deficit with the European Union fell US$1.6 billion to US$12.7 billion in May, as both exports and imports dropped.

The pace of declines in imports and exports slowed from recent months. The value of cars imported in May slumped by $829 million or 47% from April. the value of oil imports dropped $417 million or 22%.

The politically sensitive deficit in the trade of goods with China rose 7.3% to $27.9 billion in May.

"On the one hand, an encouraging rebound to expansionary territory in USA manufacturing sentiment in June bodes well for Canadian firms, especially with the US accounting for a disproportionate share of Canada's exports", Abdelrahman wrote in a report. Similarly, export of meat products has shown good growth, while tobacco shows a promising future.

US' trade deficit widened more than expected in May.

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