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The trade deficit in goods and services reached -$140.5 billion in March. The trade deficit in goods has grown from $-123.3 billion at the beginning of the year, to -$163.5 billion by the end of March. While the US ran a trade surplus in services of +$23 billion.

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There has been a sharp increase of imports ahead of the tariffs, which was a drag on Q1 GDP growth. No chart captures this better than the one above. The orange line shows the surge in imports that went from $340 billion just prior to the election, to a record $419 billion in March. A gain of over 23% in 5 short months. Meanwhile total exports were basically unchanged at $278.5 billion.

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I prefer to look at total trade (imports + exports) to get a gauge on economic activity. By this measure, total trade grew to a record $697.4 billion in March, for a gain of 2.7%.

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Total trade is 18.1% higher than it was a year ago. In normal times, this would be a sign that the economy is strong. But nothing about this is normal.

So how was trade effected by these policies? Well we only have data through March. So we really don’t know yet. But the chart above shows the cyclical shift away from China that began a long time ago. Goods imported by China was only 11% of total imported goods, which happens to be the lowest rate in about 20 years, and down from a record 22% in 2018.

China has fallen from our number one trading partner to third over the years. The latest data shows Mexico ($238.3B), Canada ($232.3B), & China ($164.0B) are our top 3, with the next closest being the UK ($86.4B).

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