The U.S. trade deficit in goods and services declined to $64.2 billion in March, after reaching an all-time high in March 2020. The trade deficit for Q1 was $203.5 billion, -27.6% smaller than a year ago.

In 2021, the annual U.S. trade deficit hit a new record at $845.0 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 +1.2% q/q in 1Q23, up +7.1% from the same period a year before, above pre-Covid levels.

Real imports of goods and services rose +0.7% q/q in 1Q23, but were down -2.0% from the same period a year ago.

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