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Import Surge Sends US Trade Deficit to Record High

In the year-to-date, the trade deficit increased by 46.4 percent to $135.8 billion compared to the same period in 2020.

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This story originally appeared on The Epoch Times

The U.S. trade deficit in goods and services rose to a record high in June largely on the back of a surge in imports as businesses built up inventories to meet robust consumer demand.

The Commerce Department said in a release Thursday (pdf) that the trade deficit—the difference between exports and imports of goods and services—rose 6.7 percent in June, hitting an all-time high of $75.7 billion.

Imports, too, climbed to a record high, rising 2.1 percent over the month to $283.4 billion. Exports, meanwhile, edged up slightly by 0.5 percent in June to $207.7 billion.

The June increase in the trade deficit was driven by a rise in the goods deficit of $4 billion to $93.2 billion and a drop in the services surplus of $0.7 billion to $17.4 billion.

In the year-to-date, the trade deficit increased by 46.4 percent to $135.8 billion compared to the same period in 2020.

Some analysts believe the trade deficit will taper in coming months as the surge in consumer spending associated with the re-opening of the wanes.

“With the peak in consumer goods demand behind us, we expect consumer goods imports to weaken from here while survey measures of export orders support that exports growth is set to strengthen,” Michael Pearce, senior U.S. economist at Capital , told The Associated Press.

The goods deficit with Europe surged by 23.5 percent over the month to $28.1 billion in June, while the politically sensitive goods deficit with China—the largest the United States runs with any country—rose 5.8 percent in June to $27.8 billion.

The year-to-date goods deficit with China totaled $158.5 billion, an increase of 19.2 percent compared to the same period in 2020.

President Donald Trump was an ardent critic of the U.S. trade deficit, which he blamed on bad deals negotiated by his predecessors and unfair trade practices by other countries, chiefly China. One of the ways Trump sought to whittle down the trade deficit with China was by negotiating a deal whose centerpiece was a pledge by Beijing to buy $200 billion more in U.S. goods and services over 2020 and 2021.

According to the Peterson Institute for International Economics (PIIE), a nonpartisan research organization that tracks the status of China’s purchases from the United States relative to its commitments, Beijing is well behind its pledge.

Through June, China bought $68.0 billion in U.S. goods, compared to a year-to-date target of $99.0 billion, a shortfall of about 45.5 percent.

The Associated Press contributed to this report.

By Tom Ozimek

 

Tom has a broad background in journalism, deposit insurance, marketing and communications, and adult education. The best writing advice he’s ever heard is from Roy Peter Clark: ‘hit your target’ and ‘leave the best for last.’

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