U.S. Census Bureau Is Set To Publish the January-June 2021 Trade Data Showing U.S. Exports Lagging As COVID-19 Continues Economic Havoc in Much of World While Imports Expand
FOR IMMEDIATE RELEASE: Aug. 4, 2021
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WASHINGTON, D.C – On Thursday the U.S. Census Bureau will release new trade data revealing how the lack of worldwide COVID-19 vaccination is widening the U.S. trade deficit, an analysis by Public Citizen shows.
The relatively high U.S. COVID-19 vaccination rate has allowed American businesses to reopen and households to increase consumption, underpinned by expansionary fiscal and monetary policies. However, most of the world is still struggling with COVID-19 outbreaks and existing or new restrictions on commercial activity and other demand-squelching COVID-fallout as the global supply of vaccines falling far short of need.
An analysis conducted by Global Trade Watch research director Daniel Rangel shows that based on the five-month data and the advance trade-in-goods June data, the U.S. overall trade deficit with the rest of the world is likely to surpass $400 billion in the first half of 2021. This would be 40% higher than the first half of 2020 and up by 35% compared to the same period in 2019, in inflation-adjusted terms.
The ballooning deficit reflects a drop in service exports, which traditionally offset part of the large U.S. trade-in-goods deficit. In the first five months of 2021, U.S. services exports were $295 billion, down 4% from 2020 and 18% from 2019. Meanwhile, goods imports jumped 22% in the first five months of the year compared to the same period in 2020.
The data will underscore how it is in the U.S. economic interest to increase production and distribution of vaccines worldwide. The International Chamber of Commerce-commissioned January 2021 study, made clear that the failure to massively vaccinate people in middle- and low-income countries undermines global economic recovery and, paradoxically, wealthy countries have the most to gain economically from ramping up immunization efforts worldwide. Yet to date, the Biden administration has not delivered on any of the three necessary steps to increase vaccines: the temporary World Trade Organization (WTO) TRIPS waiver to eliminate intellectual property barriers, pushing vaccine firms to transfer technology to facilitate the speediest scale-up of production, and the funding to boost manufacturing globally.
A recent United Nations Development Program, World Health Organization and University of Oxford analysis showed that every additional million people vaccinated would add $7.93 billion to the global economy with high-income countries gaining most. Rich nations would benefit from 71% of the projected gains with expanded vaccination, much of which would come in the form of demand for their exports. To that extent, a truly global vaccination campaign besides delivering the evident outcome of taming the virus, would generate economic gains for everyone.
Pandemic-related restrictions on travel and indoor activities are crushing demand in the service sectors on which the U.S. relies to calibrate its trade balance, such as education and tourism. In the meantime, and despite the international supply chains feebleness that the pandemic laid bare, and the Biden administration seeks to remedy, U.S. imports of goods are growing at a faster pace than U.S. exports. The five-month 2021 deficit in manufactured goods is 20% higher than in 2019 and 30% higher than last year.
“The best trade policy that the Biden administration could undertake in the coming months is making a whole-of-government effort to put shots in arms throughout the world through a strategy that removes intellectual property barriers on widespread production of COVID-19 related technologies, compels Big Pharma to share vaccine-making know-how and secures the necessary funding to generate new manufacturing capacity. It is not only the moral thing to do, but it would also greatly benefit the U.S. economy,” said Rangel.