| Consensus | Consensus Range | Actual | Previous | Revised | |
|---|---|---|---|---|---|
| Balance | $-123.0B | $-130.0B to $-96.4B | $-131.4B | $-98.4B | $-98.1B |
Highlights
The international trade deficit in goods and services jumps 34.0 percent to $131.4 billion in January, wider than the consensus for a deficit of $123.0 billion in the Econoday survey of forecasters. The January deficit for goods is up 27.2 percent to $156.8 billion while the services surplus is up 0.7 percent to $25.4 billion. The widening trade deficit reflects moderating increases in export demand for US goods and services and an upswing in imports to get ahead of proposed increases in tariffs.
Although this is only the first month of the first quarter 2025, it strongly suggests that net exports will drag down on growth when the advance estimate of first quarter GDP is released on Wednesday, April 30 at 8:30 ET.
Total exports for goods and services is up 1.2 percent to $269.8 billion in January. Exports of goods are up 1.6 percent to $172.8 billion. Exports increased $4.2 billion for capital goods and $1.7 billion for consumer goods, while other goods are down $1.3 billion and foods, feeds, and beverages are down $1.0 billion. Exports of services are up 0.6 percent to $97.040 billion on a variety of small gains across categories.
Total imports of goods and services are up 10.0 percent to $401.2 billion in January. Imports of goods are up 12.3 percent to $329.6 billion. Goods imports include increases of $23.1 billion increase in industrial supplies and materials, $6.0 billion in consumer goods, and $4.6 billion in capital goods. Imports of services are up 0.6 percent to $71.7 billion with small increase in a few categories.
In January, the trade deficit with China widened to $23.7 billion after $22.0 billion in December. The deficit with Japan widened to $6.8 billion after $5.3 billion in the prior month. The January deficit with South Korea widened to $5.8 billion after $4.7 billion in December. The deficit with Taiwan in January increased to $5.0 billion after $2.8 billion in December. The deficit with all Pacific Rim countries is $41.8 billion in January from $33.296 billion in December. The North American trade deficit with Canada and Mexico is little changed at $18.6 billion in January after $18.2 billion in December. The trade deficit with Europe is also little changed at $17.5 billion in January after $17.4 billion in December.
Although this is only the first month of the first quarter 2025, it strongly suggests that net exports will drag down on growth when the advance estimate of first quarter GDP is released on Wednesday, April 30 at 8:30 ET.
Total exports for goods and services is up 1.2 percent to $269.8 billion in January. Exports of goods are up 1.6 percent to $172.8 billion. Exports increased $4.2 billion for capital goods and $1.7 billion for consumer goods, while other goods are down $1.3 billion and foods, feeds, and beverages are down $1.0 billion. Exports of services are up 0.6 percent to $97.040 billion on a variety of small gains across categories.
Total imports of goods and services are up 10.0 percent to $401.2 billion in January. Imports of goods are up 12.3 percent to $329.6 billion. Goods imports include increases of $23.1 billion increase in industrial supplies and materials, $6.0 billion in consumer goods, and $4.6 billion in capital goods. Imports of services are up 0.6 percent to $71.7 billion with small increase in a few categories.
In January, the trade deficit with China widened to $23.7 billion after $22.0 billion in December. The deficit with Japan widened to $6.8 billion after $5.3 billion in the prior month. The January deficit with South Korea widened to $5.8 billion after $4.7 billion in December. The deficit with Taiwan in January increased to $5.0 billion after $2.8 billion in December. The deficit with all Pacific Rim countries is $41.8 billion in January from $33.296 billion in December. The North American trade deficit with Canada and Mexico is little changed at $18.6 billion in January after $18.2 billion in December. The trade deficit with Europe is also little changed at $17.5 billion in January after $17.4 billion in December.
Market Consensus Before Announcement
The goods trade deficit widened dramatically to a record $153.3 billion in January as importers rushed to get things into the country before tariffs kick in. Forecasters see the deficit with goods and services together at $123.0 billion, way up from $98.4 billion in December.
Definition
Updating the goods portion of the advance report and offering initial data on services, this report provides complete information on cross-border trade. Merchandise trade is available by export, import and trade balance for six principal end-use commodity categories and for more than one hundred principal commodity groupings. Data are also available for 48 countries and 7 geographic regions. Detailed information is reported on oil and motor vehicle imports. Services trade is available by export, import and trade balance for seven principal end-use categories.
Description
Changes in the level of imports and exports, along with the difference between the two (the trade balance) are a valuable gauge of economic trends here and abroad. While these trade figures can directly impact all financial markets, they primarily affect the value of the dollar in the foreign exchange market.
Imports indicate demand for foreign goods and services here in the U.S. Exports show the demand for U.S. goods in countries overseas. The dollar can be particularly sensitive to changes in the chronic trade deficit run by the United States, since this trade imbalance creates greater demand for foreign currencies. The bond market is also sensitive to the risk of importing inflation. This report gives a breakdown of U.S. trade with major countries as well, so it can be instructive for investors who are interested in diversifying globally. For example, a trend of accelerating exports to a particular country might signal economic strength and investment opportunities in that country.
Importance
The international trade balance on goods and services is the major indicator for foreign trade. While the trade balance (deficit) is small relative to the size of the economy (although it has increased over the years), changes in the trade balance can be quite substantial relative to changes in economic output from one quarter to the next.
Interpretation
Market reaction to this report is complex. Typically, the smaller the trade deficit, the more bullish for the dollar. Also, stronger exports are bullish for corporate earnings and the stock market.
Both the level and changes in the level of international trade indicate relevant information about the trends in foreign trade. Like most economic indicators, the trade balance is subject to substantial monthly variability, especially when oil prices change. It is more appropriate to follow either three-month or 12-month moving averages of the monthly levels.
It is also useful to examine the trend growth rates for exports and imports separately because they can deviate significantly. Trends in export activity reflect both the competitive position of American industry and the strength of domestic and foreign economic activity. U.S. exports will grow when: 1) U.S. product prices are lower than foreign product prices; 2) the value of the dollar is relatively weaker than that of foreign currencies; 3) foreign economies are growing rapidly.
Imports will increase when: 1) foreign product prices are lower than prices of domestically-produced goods; 2) the value of the dollar is stronger than that of other currencies; 3) domestic demand for goods and services is robust.
The international trade report does show bilateral trade balances with our major trading partners. Since the value of the dollar versus various foreign currencies does not always move in tandem, we can see a narrower or wider trade deficit with different countries. In the 1980s and 1990s, the U.S. trade deficit with Japan often caused political problems. During the next 20 years the deficit with China began to grow rapidly and, like Japan, once again caused political problems. While American consumers benefit from weak imports, American workers often lose their jobs as these goods are no longer produced in the United States. Ideally, the United States would be exporting (high end) goods that other countries don't produce.
Imports indicate demand for foreign goods and services here in the U.S. Exports show the demand for U.S. goods in countries overseas. The dollar can be particularly sensitive to changes in the chronic trade deficit run by the United States, since this trade imbalance creates greater demand for foreign currencies. The bond market is also sensitive to the risk of importing inflation. This report gives a breakdown of U.S. trade with major countries as well, so it can be instructive for investors who are interested in diversifying globally. For example, a trend of accelerating exports to a particular country might signal economic strength and investment opportunities in that country.
Importance
The international trade balance on goods and services is the major indicator for foreign trade. While the trade balance (deficit) is small relative to the size of the economy (although it has increased over the years), changes in the trade balance can be quite substantial relative to changes in economic output from one quarter to the next.
Interpretation
Market reaction to this report is complex. Typically, the smaller the trade deficit, the more bullish for the dollar. Also, stronger exports are bullish for corporate earnings and the stock market.
Both the level and changes in the level of international trade indicate relevant information about the trends in foreign trade. Like most economic indicators, the trade balance is subject to substantial monthly variability, especially when oil prices change. It is more appropriate to follow either three-month or 12-month moving averages of the monthly levels.
It is also useful to examine the trend growth rates for exports and imports separately because they can deviate significantly. Trends in export activity reflect both the competitive position of American industry and the strength of domestic and foreign economic activity. U.S. exports will grow when: 1) U.S. product prices are lower than foreign product prices; 2) the value of the dollar is relatively weaker than that of foreign currencies; 3) foreign economies are growing rapidly.
Imports will increase when: 1) foreign product prices are lower than prices of domestically-produced goods; 2) the value of the dollar is stronger than that of other currencies; 3) domestic demand for goods and services is robust.
The international trade report does show bilateral trade balances with our major trading partners. Since the value of the dollar versus various foreign currencies does not always move in tandem, we can see a narrower or wider trade deficit with different countries. In the 1980s and 1990s, the U.S. trade deficit with Japan often caused political problems. During the next 20 years the deficit with China began to grow rapidly and, like Japan, once again caused political problems. While American consumers benefit from weak imports, American workers often lose their jobs as these goods are no longer produced in the United States. Ideally, the United States would be exporting (high end) goods that other countries don't produce.
