On Tuesday, US Commerce Department said that the world’s no. 1 economy’s trade deficit had soared in August to the highest level in around fourteen years. In point of fact, according to US Commerce Department data revealed earlier on Tuesday, US trade deficit, the gap between imports and exports of US goods and services, climbed by 5.9 per cent to $67.1 billion to the highest level since August 2006, while prices of goods and services which the US purchase abroad rose 3.2 per cent to $239 billion, mostly led by a rise in import of crude oil, cars and auto parts, however, prices of exports that help build up FX reserves rose 2.2 per cent and led to a spanning of US trade deficit to a 14-year high, meaning the US consumers had been spending more on foreign goods and services than the country’s producers’ could generate in revenues from the sales abroad.
Nonetheless, the pandemic outbreak had played a critical role in latest leg of downbeat trend in trade deficit data as a forced business closure of local businesses had made the US consumers more reliant on exported goods and services, while a mass-scale disruption in production lines of locally made goods and services alongside international travel bans had pummelled the value of US exports in August.
US trade surplus slumped to the lowest in eight years
Apart from that, while a soaring US trade deficit had been checked by an upsurge in the shipments of soybeans and the country’s politically sensitive trade deficit with Beijing fell 6.7 per cent to $26.4 billion, the United States’ trade surpluses had hit its lowest level since January 2012 to $16.8 billion in August.
Besides, as a heavily hammered US exports and imports value had taken a hefty header of 15.1 per cent to $3.2 trillion this year thus far, referring to an elusive recovery in overall trade activities in a near- to intermediate-term outlook, a chief US economist at High Frequency Economics Rubeela Farooqi said, “Overall, trade flows remain subdued and the outlook is uncertain given a muted global growth and demand backdrop”.