China was back on top as U.S. trade with Canada, Mexico plummeted 40%. The trade relationship benefitted from China’s factories reopening in April, according to the biweekly Forbes on June 4.
It was reported that U.S. trade with the world tumbled more than 24% in April as compared to the previous April, according to the latest U.S. Census Bureau data which was released also on June 4.
That’s more than triple the 7.65% loss just one month ago, as the impact of the coronavirus pandemic began to appear.
Particularly hard hit in April was U.S. trade with Mexico and Canada.
The one “bright” spot was China. The trade relationship benefitted from China’s factories reopening in April. It also led to a one-month increase in the U.S. trade deficit, though it is down for the year.
U.S. trade with Mexico, which remains the nation’s top trade partner on a year-to-date basis, saw its U.S. trade fall 46.17% when compared to the previous April.
U.S. trade with Canada, which remains the nation’s No. 2-ranked trade partner on a year-to-date basis, saw its total U.S. trade plummet 42.82%.
These are big numbers. With those swoons, China returned to the No. 1 spot, at least for April, as its U.S. trade was off only 6.79%.
The reasons for the U.S. trade declines with Canada and Mexico are, while markedly different, both clearly tied to the coronavirus and the ensuing economic crisis in the United States.
Canada is overwhelmingly the United States’ top source of oil, which suffered from a rout in prices and demand. Mexico is a large manufacturer, particularly in the automotive industry, fueling exports and imports of parts and U.S. imports of vehicles.
These three countries, which combined are accounting for slightly less than 40% of all U.S. trade this year, were not the only ones to suffer large declines in April. Trade with India is off 44.26%, with France 49.35%, with Israel 40.28% and with Russia 44.65%.
Even what might appear to be a piece of good news is decidedly not.
U.S. trade with Switzerland was up 90.24% in April, when compared to April of 2019. That is almost exclusively due to a massive increase in both the quantity and value of U.S. gold imports. Gold normally rises in price during times of economic distress. Demand for gold is never a good sign, since it is almost exclusively a security blanket. It means the wrong people are frightened.
Another statistic that might seem like good news, a statistic that will warm the hearts of many, including President Trump, is the declining U.S. trade deficit.
But, as is the case with gold, the statistic really reflects something else: It reflects an economy that is in decline. Want further proof? The percentage of U.S. trade that is an export fell to 36.67% in April. That’s the lowest total in more than five years. That means that as the total pie has gotten smaller, the U.S. export percentage of that pie has shrunk even more rapidly.