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U.S.: Trade Deficit Not as Bad as Headline Suggests

ByThe National Bank of Canada
Published 02/13/2012, 10:59 PM
Updated 05/14/2017, 06:45 AM

With December’s $48.8 bn trade deficit, the tally for 2011 as a whole rose to $558 bn or 3.7% of GDP, a three-year high. Looking at those numbers, one could argue that the U.S. is heading down the wrong alley again and worsening the global trade balance problem.

While it’s true that trade imbalances persist with Asian countries (just check out the current account surpluses in those economies), the worsening U.S. trade balance is primarily due to its oil imports. Much of the deterioration in the past couple of years came from petroleum, with oil prices rising more than 50% over the period. As today’s Hot Chart shows, the goods and services trade balance excluding petroleum has in fact stabilized at 1.5% of GDP. The more sustainable trade picture is largely due to strong export growth. Over the past couple of years, exports have grown 34% versus 8% for GDP, allowing its share of GDP to reach 13.9% in 2011, the highest on record. With trade now growing in influence stateside, expect American authorities to maintain their “not so strong” US$ policy.

U.S Trade deficit not as bad as headline suggests

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