July 2020 Biggest Monthly Trade Deficit since July 2009
WASHINGTON, D.C. – The $356 billion trade deficit in the first seven months of 2020 is 18% higher than the $302 billion deficit during the same period in 2016, an inflation-adjusted analysis of today’s latest Census Bureau trade data conducted by Public Citizen shows.
The July 2020 deficit is the largest monthly deficit since July 2008, during the global financial crisis and related recession. The unexpectedly large growth in the trade deficit is especially notable given that trade flows have declined overall because of the global COVID-19 crisis.
“Trump pledged to eliminate the trade deficit and end job outsourcing, but the overall 2020 deficit is on track to be larger than in 2016, and his Labor Department has certified more than 300,000 American jobs were lost to outsourcing and imports since 2017,” said Lori Wallach, director of Public Citizen’s Global Trade Watch. This figure reflects the number of workers whose trade-related job losses were approved for Trade Adjustment Assistance (TAA) retraining and other benefits, which means the total job loss number is even greater, as workers must know about TAA and successfully apply to be counted.
The new U.S. Census Bureau trade data showed:
- The seven-month 2020 overall trade deficit is 18% higher than the deficit during the same period in 2016, and 0.6% above the deficit for the same period in 2019. From January to July 2016, the goods and services trade deficit was $302 billion, in inflation-adjusted terms; from January to July 2020, it was $356 billion. (The unadjusted figures provided in the government database show a rise from $279 billion to $355 billion.)
- The increase is especially notable given the drop in trade flows related to the COVID-19 pandemic. Comparing the trade flows in the first seven months of 2019 to the same period in 2020, U.S. trade has decreased 15%.
- The July 2020 trade deficit is the largest monthly deficit since July 2008 during the global financial crisis and recession. July’s 2020 goods and services trade deficit rose from $50.7 billion in June 2020 to $63.5 billion, a 25.3% increase. Imports grew 11% in July relative to June, to $231.67 billion, while exports only grew 8.1%, to $168.1 billion, and remain below the $209.65 billion in February 2020 before the pandemic.
- The July 2020 monthly trade deficit in goods ($80.9 billion) is also the highest on record. And the 2020 seven-month trade deficit in goods is 5% higher than during same period of 2016, when it was $470 billion (in inflation-adjusted dollars). The U.S. trade deficit in goods decreased 5.6% in inflation-adjusted terms from $524 billion in the first seven months of 2019 to $494 billion in the same period of 2020.
- The July 2020 surplus in services trade was the smallest since August 2012, at $17.4 billion.
- The goods deficit with Mexico hit a record high of $10.6 billion in July 2020. The trade in goods deficit with North American Free Trade Agreement (NAFTA) partners is 16.17% higher in the first seven months of 2020 relative to the same period in 2016, but down 13.68% relative to 2019 even as Mexican exports to the U.S. began to expand significantly in June.
- The NAFTA deficit in the first seven months of 2020 was $119 billion, 16.17% higher than the same period in 2016, when it was equivalent to $102 billion in inflation-adjusted dollars. (In nominal terms, the goods trade deficit with NAFTA parties increased by 25.5%, or $24 billion.)
- The goods trade deficit with NAFTA parties decreased by $18.9 billion in inflation-adjusted terms compared to the same period in 2019, largely because of measures taken to prevent the spread of COVID-19.
- The China trade in goods deficit is down relative to 2016, but there is “trade diversion” effect of imports increasing from other countries.
- The 2020 seven-month trade deficit with China of $164 billion is 20.6% smaller compared to 2016, when it was $207 billion in inflation-adjusted dollars for the January-July period. The China deficit is down 19% in inflation-adjusted terms from 2019, when it was $203 billion in the first seven months.
- In inflation-adjusted dollars, the goods trade deficit with the rest of the world (excluding China) increased from $321 billion to $330 billion in the first seven months of 2020 relative to the same period in 2019, a 2.8% rise.
*Data Note: Trade data is sourced from the U.S. Census Bureau. We present deficit figures adjusted for inflation to the base month of July 2020 and expressed the data in constant dollars so that the figures represent actual changes in the trade balances. We also offer the “nominal” figure, which is the number you will see in the U.S. Census Bureau data for figures earlier than 2020. Some economists view the nominal data as more accurately reflecting the overvalued U.S. dollar.