February 07, 2017 – The US trade deficit is a monthly report, which Bureau of Economic Analysis and the U.S. Census Bureau release every month. Few moments ago, the latest trade deficit report [for the month of December] was released and it is showing a good/solid increase in US exports. The previous month’s trade balance was $-45.2 billion; analysts were predicting that December’s trade balance sheet will be around $-45.0 billion, but the actual figure is $-44.3 billion. The better than expected trade balance sheet has helped US Dollar to gain more strength. USD is the strongest currency in today’s foreign exchange market. GBP/USD is once again trading below 1.25000 and EUR/USD is going towards 1.05000.
Thanks to the increase in exports, the US trade balance sheet is now down to $-44.3 billion, a level not seen in more than a year! As we all know, the Trump administration has promised to bring huge changes to USA’s trade policies. Trump has already pulled out USA from Trans-Pacific Partnership agreement, which was signed by twelve countries. He wants to put America-First; he wants to promote exports and limit imports as much as possible. He has been targeting the auto industry via his twitter account. He wants the top carmakers to stop building manufacturing plants and cars in Mexico and bring all the manufacturing to America. He wants them to build-in-America if they want to sell it here. Trump also wants to revisit the NAFTA agreement, which was signed by USA, Canada, and Mexico. Only time will tell if Trump is doing the right thing for the US economy…
“What Trump administration is doing might bring short-term positivity in US trade deficit and some other economic figures, but in the long run, I am not sure how things will play-out. USA’s economy is in a very good shape; we ought to thank Obama and his administration for that. It is very much possible that Trump’s Nationalist policies drag US economy to recession like state. He is certainly playing with fire and he doesn’t seem to realize the severity of current situation,” said Naeem-ul-haq, a writer for a local newspaper.
The export of electronic goods has increased to a record high level, but the strong dollar is still negatively effecting US exports. As I said in my previous post, Trump might opt for a Weak-Dollar-Is-Good policy in order to increase exports.
Imports in December also rose, but imports from China went down to a record low level. Additionally, exports from Mexico also dropped, which shouldn’t come as a surprise. :)