US international trade balance for January -131.4B vs -127.4B estimate

• Prior month -$98.4B
• International trade balance (Goods and services) -$131.4B vs -$127.4B estimate. New record deficit
• Good trade balance for January -$155.57B vs -$153.2B preliminary. Last month -$122B. New record deficit.

Details:

• January exports: $269.8B (+$3.3B from December)
• January imports: $401.2B (+$36.6B from December)
• Goods deficit: Increased by $33.5B to $156.8B
• Services surplus: Increased by $0.2B to $25.4B
• Year-over-year deficit: Increased by $64.5B (+96.5%)
• Year-over-year exports: Increased by $10.6B (+4.1%)
• Year-over-year imports: Increased by $75.2B (+23.1%)

Looking at the imports more closely:

• Imports of goods: Increased $36.2B to $329.5B in January
• Imports of goods on a Census basis: Increased $36.2B
• Industrial supplies and materials: Increased $23.1B
  • Finished metal shapes: +$20.5B
• Consumer goods: Increased $6.0B
  • Pharmaceutical preparations: +$5.2B
  • Cell phones & household goods: +$1.2B
• Capital goods: Increased $4.6B
  • Computers: +$3.0B
  • Computer accessories: +$1.2B
  • Telecommunications equipment: +$1.1B
• Net balance of payments adjustments: Decreased $0.1B
• Imports of services: Increased $0.4B to $71.7B in January
  • Charges for intellectual property: +$0.2B
  • Other business services: +$0.1B
  • Travel: -$0.1B

On the export side:

• Exports of goods: Increased $2.7B to $172.8B in January

• Exports of goods on a Census basis: Increased $2.8B

• Capital goods: Increased $4.2B

  • Civilian aircraft: +$1.1B
  • Semiconductors: +$0.7B
  • Computers: +$0.5B
  • Civilian aircraft engines: +$0.5B

• Consumer goods: Increased $1.7B

  • Pharmaceutical preparations: +$0.8B
  • Jewelry: +$0.6B

• Other goods: Decreased $1.3B

• Foods, feeds, and beverages: Decreased $1.0B

  • Soybeans: -$0.8B

• Net balance of payments adjustments: Decreased $0.1B

• Exports of services: Increased $0.6B to $97.0B in January

  • Financial services: +$0.2B
  • Telecom, computer & information services: +$0.1B
  • Other business services: +$0.1B
  • Transport: +$0.1B
  • Maintenance & repair services: +$0.1B
  • Government goods & services: -$0.3B

As the focus turns to countries, below are the details of the surpluses and deficits by country. Of note is the surge in luxury goods from Switzerland. Switzerland’s surplus is nearly equal to the EU. Ireland import increased by 6.2B. Ireland is a tech supplier of goods.

Of course, Mexico and Canada are running large deficits and gives Pres Trump fuel for the tariff fire.

Trade Balance by Country – January

Surpluses (in billions)

• Netherlands: +$4.3B
• South & Central America: +$4.3B (↑$0.7B from December)
  • Exports: $18.0B (↑$0.3B)
  • Imports: $13.7B (↓$0.5B)
• Belgium: +$0.6B
• Brazil: +$0.6B

Deficits (in billions)

• China: -$29.7B
• European Union: -$25.5B
• Switzerland: -$22.8B (↑$9.8B)
  • Exports: $1.8B (↑$0.6B)
  • Imports: $24.6B (↑$10.3B)
• Mexico: -$15.5B
• Ireland: -$12.4B (↑$6.2B)
  • Exports: $1.2B (~$0.0B change)
  • Imports: $13.6B (↑$6.2B)
• Vietnam: -$11.9B
• Canada: -$11.3B
• Germany: -$7.6B
• Taiwan: -$7.5B
• Japan: -$7.4B
• South Korea: -$5.4B
• India: -$4.2B
• Italy: -$3.5B
• Malaysia: -$2.5B
• Australia: -$2.0B
• Hong Kong: -$1.4B
• France: -$1.0B
• Singapore: -$1.0B
• Israel: -$0.6B
• United Kingdom: -$0.5B
• Saudi Arabia: -$0.1B

The goods trade deficit is soaring as companies adjust to the proposed tariffs and increase the import of goods before they go into effect. This could lead to choppy data going forward depending on how the economy reacts to a slower economy, inflation, uncertainty or to changes in policy too (will the Whack a Mole tariffs on/tariffs off scenario). In addition, what is the impact of US exports? Will countries boycott US goods abroad?

The deficit at record levels will give Pres. Trump ammunition to tell the public how deficits are at record levels..

This article was written by Greg Michalowski at www.forexlive.com.