The rising trade deficit subtracted 11% points from July to September quarter, a period when the economy as measured by gross domestic product slowed to an annual growth rate of just 2% sharply lower than GDP growth rate of 6.7% in April to June period.

As per USA Import Data, the US trade deficit hit an all time high of $80.09 billion in September as America exports fell sharply while imports even with supply chain crisis at American ports continue to increase.

The September deficit topped the previous record of $73.2 billion set in June. The deficit is the gap between the United States exports to the rest of the world and the goods it imports from foreign nations.

As per USA Export Data, exports plunged 3% to $207.6 billion while imports rose 0.6% to $288.5 billion. Part of the deficit 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 products coming back on track.

The politically sensitive goods deficit with China shot up 15% in September to $36.5 billion. In the initial nine months of the year 2020, the deficit of USA with China, the largest with any country, totalled $255.4 billion, an increase of 14.9% over the same period in 2020.

The overall trade deficit through September hit $638.6 billion, a 33.1 increase over the same period last year. That big jump reflects the surge in US demand for imports compared to the last year when many parts of the economy were shut down because of Covid-19 pandemic.

In September 2021, the deficit in goods rose to $98.2 billion, a rise by sharp 10% from the August deficit. The surplus in services which covers such things as airline travel and financial services rose 10.5% to $17.2 billion, well below the levels seen before the pandemic hit. The surplus in services is expected to rise further as Covid-19 cases retreat and travel restrictions are eased.

As the Covid-19 pandemic cases are witnessing a fall, and the supply chain becomes normal, the US trade deficit should start improving in coming months although the improvement may be modest. The politically sensitive goods deficit of US with China shot up 15% in September to $36.5 billion.

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