June 19, 2023

The U.S. trade deficit in goods and services rose to $74.6 billion in April, but was still -13.3% smaller than a year ago. The trade deficit for Q1 was $201.0 billion, -27.2% smaller than a year ago.

In 2022, the annual U.S. trade deficit hit a new record at $951.2 billion. Higher tariff policies under the Trump and Biden Administrations have not made any significant dent in the trade deficit. Usually the trade deficit shrinks during a recession, but it grew rapidly during the Covid recession.

The wider trade deficit was likely due in part to the strong U.S. dollar. However, the value of the dollar, on a trade-weighted basis, peaked in October and has returned to the same level as a year ago – though the dollar remains historically quite strong.

Real exports of goods and services (adjusted for inflation) rose +1.3% q/q in 1Q23, up +7.2% from the same period a year before, above pre-Covid levels.

Real imports of goods and services rose +1.0% q/q in 1Q23, but were down -1.8% from the same period a year ago.