Kiplinger Trade Outlook: Imports Grew Faster than Exports in January

With trade partners struggling, U.S. exporters are in for challenging times.

Kiplinger’s Economic Outlooks are written by the staff of our weekly Kiplinger Letter and are unavailable elsewhere. Click here for a free issue of The Kiplinger Letter or to subscribe for the latest trends and forecasts from our highly experienced Kiplinger Letter team.

The trade deficit widened at the start of the year as imports outpaced exports. The U.S. trade deficit in goods and services rose to a seasonally adjusted $67.4 billion in January, from a downwardly revised $64.2 billion in December. January’s figure is the largest monthly deficit since last April. The trade deficit is a measure of the difference between what the United States buys from foreign nations and what it sells overseas. The steep widening in the trade deficit in January from the previous month came amid a jump in imports and only a modest increase in exports. 

The outlook for exports remains weak, due to cooling demand overseas. Total exports were basically flat in January, growing just 0.1% from the previous month. Exports of automotive vehicles and parts, consumer goods and capital goods rose modestly during the month, but exports of industrial supplies and materials fell 2.6%, while exports of foods, feeds and beverages fell 1.7%. Gains in exports of services were split evenly between financial services and travel. The U.S. dollar has rallied since the end of December, which will impact export growth in the months ahead since a stronger dollar makes U.S. products more expensive for foreigners paying in other currencies. With most of the country’s major trading partners struggling to generate much economic growth, the outlook for exports remains weak. 

Subscribe to Kiplinger’s Personal Finance

Be a smarter, better informed investor.

Save up to 74%
https://cdn.mos.cms.futurecdn.net/hwgJ7osrMtUWhk5koeVme7-200-80.png

Sign up for Kiplinger’s Free E-Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

Sign up

A sharp increase in inbound shipments of capital goods led to a 1.1% rise in total imports in January. Imports of autos and parts rose 5%, while imports of industrial supplies fell 2.3% and consumer-goods imports fell 1.8%. Imports of total services rose 0.8% amid a rise in transport services. The overall trade surplus in services fell to $24.2 billion in January. The import component of the ISM manufacturing index has strengthened after breaking into expansionary territory in January. Durable goods orders are showing some signs of life as well, which bodes well for imports over the next few months.

Trade’s net contribution to GDP growth in the first quarter could be negative. January’s data indicate that net exports in the first quarter will be a modest drag on GDP growth. A rebound in exports in February or March, however, could counteract recent import strength and thus lessen the negative impact of trade in Q1. Looking ahead, trade’s contribution to GDP growth will likely remain moderate in the first half of 2024, as weak economic growth across the world dampens the demand for U.S. exports. 

Source: Department of Commerce, Trade Data

Related content

Rodrigo Sermeño
, The Kiplinger Letter

Rodrigo Sermeño covers the financial services, housing, small business, and cryptocurrency industries for The Kiplinger Letter. Before joining Kiplinger in 2014, he worked for several think tanks and non-profit organizations in Washington, D.C., including the New America Foundation, the Streit Council, and the Arca Foundation. Rodrigo graduated from George Mason University with a bachelor's degree in international affairs. He also holds a master's in public policy from George Mason University's Schar School of Policy and Government.