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 fell slightly in February, narrowing to a seasonally adjusted $122.7 billion from a downwardly revised $130.7 billion in January — a 6.1% monthly decline. The trade deficit is a measure of the difference between what the United States buys from foreign nations and what it sells overseas, and includes both goods and services. The data show American companies getting ahead of new U.S. tariffs by fast-tracking orders before the levies took effect. Year-to-date, exports have increased 4.6%, while imports have increased 21.4% from the same period a year ago. With the tariff announcements in April, including a 10% reciprocal tariff on virtually all U.S. imports, the trend is unlikely to reverse any time soon. While softening economic activity in advanced economies will weigh on demand for U.S. goods abroad, the recent weakness of the dollar may support overseas demand for American products.
The strength in exports in February was broad-based. Total exports rose 2.9% from the previous month. Gains in exports were led by stronger sales of industrial supplies, but outbound shipments of capital goods plus autos and parts also picked up. Outbound shipments of nonmonetary gold accounted for nearly half of the total increase in goods exports. The prospect of a trade war seems to have prompted firms abroad to rush orders to avoid retaliatory tariffs levied on American goods by their own governments.
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.
Imports were high again in February, in line with January’s level, the result of a record increase. Imports of goods decreased slightly, by $500 million, which entirely offset a $500 million gain in imports of services. Most of the decline in goods imports was tied to a fall in purchases of finished metal shapes and nonmonetary gold. Imports of consumer goods and capital goods continued to grow in February, led by purchases of cell phones, pharmaceuticals, computers, civilian aircraft and medical equipment. Imports have outpaced exports on average over the past nine months.
The surge in imports so far this year is likely to dent GDP growth in the first quarter. Excluding the data distortion from gold, imports are on track for an 18% annualized increase, in real terms, in the first quarter. Exports are on track for a much smaller 4.6% annualized gain.
Source: Department of Commerce, Trade Data
Related content
-
How Trump's First 100 Days Have Impacted Your PortfolioPresident Trump's first 100 days in office have been busy, with a flurry of executive orders sparking volatility in the stock and bond markets.
-
Should You Donate Money to the Social Security Trust Funds?You can make charitable donations to Social Security, the safety net for older Americans. But will it make a lasting impact?
-
The Economic Impact of the US-China Trade WarThe Letter The US-China trade war will impact US consumers and business. The decoupling process could be messy.
-
AI Heads to WashingtonThe Kiplinger Letter There’s big opportunity for AI tools that analyze MRIs and other medical images. But also big challenges that clinicians and companies will have to overcome.
-
The AI Doctor Coming to Read Your Test ResultsThe Kiplinger Letter There’s big opportunity for AI tools that analyze CAT scans, MRIs and other medical images. But there are also big challenges that human clinicians and tech companies will have to overcome.
-
The New Space Age Takes OffThe Kiplinger Letter From fast broadband to SOS texting, space has never been more embedded in peoples’ lives. The future is even more exciting for rockets, satellites and emerging space tech.
-
Rising AI Demand Stokes Undersea InvestmentsThe Kiplinger Letter As demand soars for AI, there’s a need to transport huge amounts of data across oceans. Tech giants have big plans for new submarine cables, including the longest ever.
-
What DOGE is Doing NowThe Kiplinger Letter As Musk's DOGE pursues its ambitious agenda, uncertainty and legal challenges are mounting — causing frustration for Trump.
-
A Move Away From Free TradeThe Letter President Trump says long-term gain will be worth short-term pain, but the pain could be significant this year.
-
The Explosion of New AI ToolsThe Kiplinger Letter Workers and consumers soon won’t be able to escape generative AI. Does that mean societal disruption and productivity gains are right around the corner?
