US Exports and Imports Fell in April
The economic fallout induced by the coronavirus pandemic led to the largest decrease of exports and imports in history, according to the Wall Street Journal.
Imports decreased by 13.7 percent in April and exports decreased by 20.5 percent. The Commerce Department reported that since they started keeping records in 1992, these declines are the largest month-over-month on record. These figures also increased the US trade deficit to 16.7 percent. The increase in the deficit is a reflection of the decrease in overseas purchases of US capital goods, industrial supplies, and vehicles.
The US saw a decrease in services as well. Services such as medical care, travel, higher education and royalties, decreased by $1.3 billion in April. “Much of the disruption may have already occurred,” Angeliki Frangou, chief executive of container ship operator Navios Maritime Containers LP, said. “As countries emerge from quarantine and return to work, we expect volumes to pick up, particularly in the second half of 2020.”
Gregory Daco, chief U.S. economist at Oxford Economics, said, “Beyond the fact that we’re seeing a significant widening of the trade deficit, what really strikes me is the pace at which trade flows are declining.”
Joel Naroff, president of Naroff Economic Advisors, stated, “We’re reopening fast enough that import demand will pick up faster than export demand. We’ll have more total activity as we go forward but the trade deficit is likely to widen.”
Lockdowns to combat the spread of the pandemic have devastated global commerce, supply chains, and physical stores. In the first quarter, US GDP contracted by 5 percent at an annualized rate. In April the International Monetary Fund released estimates stating that the US economy would shrink 5.9 percent this year. It predicted the global economy would contract by 3 percent.
Canada also reported similar losses, as the country’s goods trade deficit expanded in April with exports reaching their lowest-ranking level since late 2010.
Global trade has already been decreasing as the US has sparred with Beijing over a trade deal and the pandemic will only make matters worse. Tensions between the two countries has grown increasingly aggressive this year as well. The US, and most of the world, is angry with China's handling of the pandemic. On Wednesday, the Trump administration threatened to block Chinese airlines from flying to and from the US starting June 16.
The U.S. deficit in goods with China grew from $16.99 billion to $25.96 billion over the last month. With the U.S. and China clashing politically, many Chinese state-controlled companies canceled certain shipments from U.S. farm exporters.
The pandemic has had significant effects on economies around the world. The second quarter of 2020 in the US is expected to be worst due to most lockdowns taking place during this quarter.
The U.S.’s largest exporter, Boeing Co., reported in late March that it planned on suspending airliner production in the Seattle area. General Electric Co. also laid off employees working on jet engine production.