The U.S. trade deficit increased in September to $80.9 billion according to Commerce Department data, setting a new record as American exports declined and supply chain issues continued to plague U.S. ports.
While imports climbed nearly half of a percentage in September, exports fell by 3% to $207.6 billion worth of goods. The previous record for the trade deficit, set in June, had been $73.2 billion. According to the Bureau of Economic Analysis (BEA), the deficit had increased by $8.1 billion since August.
Trade deficits with several major countries increased, including China and Mexico. According to the data, September saw a $3.4 billion increase in the deficit with China, bringing America’s total trade deficit with China up to $31.5 billion. Similarly, the trade deficit with Mexico also increased by $2.3 billion.
Exports of crude oil, semiconductors, civilian aircraft engines, and computer accessories all decreased while imports of computers and other electronics increased.
“Part of the weakness reflected a 15.5% drop in petroleum exports related to the drilling rig and refinery shutdowns during Hurricane Ida in the Gulf of Mexico. Economists expect that decline to reverse in coming months with petroleum production coming back on line,” The Associated Press reported.
Not only have imports increased, but the prices of the imported goods have jumped as well. Some estimates show that imported consumer goods are roughly 1.4% more expensive than a year ago and industrial goods are 35% higher.
Some have chosen to pin the increasing U.S. trade deficits as an impact stemming from the pandemic.
“We look for the trade balance to remain historically elevated through year-end, but moderation in domestic demand will cool import volumes while steady vaccine diffusion and slower virus spread should underpin stronger export growth,” said Kathy Bostjancic, an economist at Oxford Economics.
Last month, U.S. Senator Josh Hawley (R-MO) introduced the “Make in American to Sell in America Act,” a proposal he says will address supply chain and inflation issues.
The plan would stipulate that for products identified as key to the defense and industrial base of the U.S., they would need 50% or more of the value of the goods produced in America in order to be sold commercially.
“For decades, Washington elites shipped American jobs overseas while factories throughout the country were shuttered, leaving us perilously reliant on foreign manufacturing,” the Republican told FOX Business.
“Now is the time for a bold, new economic agenda that will restore the American heartland and put American workers before corporate profits,” he added. “We cannot let this moment pass and return to Washington’s failed economic consensus.”
In an essay last week for The New York Times, Hawley noted potential problems that might come from relying too heavily on goods from China.
He argued that “[America] is dangerously dependent on the productive capacity of China, our chief adversary” and that the U.S. needed to assert “economic independence.”
“America is a strong nation. We should start acting like one,” he wrote, “While distribution problems are a factor right now in the crisis, structural reforms are imperative to reassert our economic independence.”
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Source: Dailywire
