The U.S. Trade Deficit is Leveling Out

This article from The Wall Street Journal, U.S. Trade Deficit Narrowed in September as Exports Rose, talks about the significant changes in the amount of international trade. Covid-19 has struck the United States as well as the rest of the planet with uncertainty. Information obtained from the U.S. Census Bureau provides us with eye-opening numbers in the month-to-month fluctuation of traded goods since the onset of Covid-19.

What does Trade Deficit tell us exactly?

In the simplest of terms, trade deficit informs us that a country is importing more than they are exporting. This means that they are spending more money on foreign products than they are selling. This isn’t always a bad thing; however, in the US, a large trade deficit can take a toll on job rates and the US dollar, which directly leads to a weakened economy. Trade is necessary and beneficial for each country, as every country can specialize in specific products. This leads to products being available through trade at a much lower cost than what another country would have to pay to produce that product. Ultimately this leads to economic efficiency.

International Trade was Highly Affected by Covid-19

With reliance on China for many goods here in the U.S., imports rose drastically as consumer demand for foreign products rose in the midst of the pandemic. With a global economic shutdown, foreign countries were not able to open up as quickly as the U.S. was able to. In turn, America wasn’t exporting efficiently, which caused the trade deficit to grow exponentially, reaching its highest point in August.

On the road to Recovery

Along with the recovery from the pandemic, The U.S. trade deficit is moderating. As more countries start to open up, exporting will become increasingly more prevalent, narrowing the deficit gap. It is essential for the U.S. to start exporting to make up for lost and spent money during this pandemic. With exports rising 2.6% and imports rising 0.5% in the month of September, the future looks promising for the U.S. to get back on track.