The U.S. merchandise-trade deficit widened to the biggest on record in February as imports dropped from an all-time high and exports retreated by a larger margin.
The deficit grew to $86.7 billion from a revised $84.6 billion in January, according to Commerce Department data released Friday. Economists in a Bloomberg survey had called for an $86 billion shortfall in February. Imports fell 1.4% to $216.9 billion, while exports decreased 3.8% to $130.1 billion, the first drop since May.
Demand from American companies and consumers has been propelling U.S. merchandise imports to record highs, overwhelming U.S. ports, even as exports remain sluggish. Freight rates have soared after a trade boom in the second half of last year caught container producers by surprise, leaving them scrambling to meet a surge in demand.
Inbound products have clogged the nation’s biggest ports, from Savannah, Ga., to Los Angeles — the biggest gateway for trade with Asia. And that was before a massive container ship blocked the Suez Canal, forcing carriers and other vessels to weigh costly and time-consuming voyages around Africa that threaten to destabilize the already fragile underpinnings of global trade.
Meanwhile, a global shortage of semiconductors has idled production at some auto plants and prompted President Joe Biden to direct his administration to address shortfalls in production of the chips as it reviews supply chains.
Overall, the value of U.S. exports plus imports dropped for the first time since May, declining to $347 billion in February, a reflection of supply-chain bottlenecks and semiconductor shortages.
Auto production slumped 8.3% in February, the largest fall since April, reflecting both the shortage of semiconductors and severe weather, Federal Reserve data showed last week.
Automotive-vehicle imports retreated 10.7%, the most since May, to $28.2 billion. Inward-bound shipments of consumer goods fell from January’s record figure, dropping 4.6% to $60.4 billion.
The report Friday also showed retail inventories were little changed from the previous month. Wholesale inventories rose 0.5%.
The trade picture will come into greater focus when the final report, which includes services, is released April 7.
Last month, the Commerce Department reported that in 2020, the overall U.S. trade deficit rose 18.1% to $682 billion, the highest since 2008, as the coronavirus threw global commerce into disarray.
The Trump administration imposed hundreds of billions of dollars in tariffs on the European Union and China, sparking a trade war that hurt U.S. manufacturing and agriculture even as it protected some slices of industry like steelmakers.
Biden and his team have so far tiptoed around Trump’s hard-line trade policies. Biden hasn’t called off Trump’s trade war with China or suggested he would scale back the tariffs on imported steel and aluminum.
U.S. Trade Representative Katherine Tai has promised to make sure trade policy benefits America’s workers, not just corporations, and to engage more with U.S. allies to counter an increasingly assertive China.
Information for this article was contributed by Eric Martin of Bloomerg News (WPNS) and by Matt Ott of The Associated Press.