US trade in goods declined in July 2023, with notable exceptions

By Jeffrey Cohen

The U.S. Department of Commerce, U.S. Census Bureau and Bureau of Economic Analysis publish international trade data each month. We know this data for the headline number: The Trade Deficit.

The headline data shows that over the past year, imports are up 1.7%, exports are up 1.6%, and the Trade Deficit was up 2.0% to $65B. However, this does not tell the entire story.

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We look at the non-seasonably adjusted data published in exhibit 14 to see the monthly change in U.S. Trade in Goods by Selected Countries and Areas: 2023. We are curious to see the recent macroeconomic trends and try and better forecast inflation and economic growth.

The first thing we notice is that U.S. exports fell by $7B and U.S. imports fell by $2B in July from June. This seems strange as we thought the US economy was growing, and the GDPNow estimate by the US Federal Reserve Bank of Atlanta is estimating the US Economy grew by 5.6% in Q2 2023. Something doesn't 'feel' right if the economy is growing at a fast clip, hours worked is declining, and now U.S. trade is declining.

In July, six countries sold or exported to the US significantly more goods than in June:
China +$1,765M
Japan +$894M
Vietnam +$819M
Germany +$786M
Italy +$567M
Indonesia +$412M

In July, 5 countries bought, or imported from the US significantly more goods than in June:
China $437M
United Kingdom +$280M
Japan +$180M
Spain +$165M
Thailand +$130M

In conclusion, the United States did less trade with the rest of the world in July 2023 than it did the previous month. However, there were a few countries that went against that trend. China, Japan did more bilateral trade, while we focused on importing more from Vietnam, Germany, Italy and Indonesia, while we sold more goods to the United Kingdom, Spain and Thailand.

We bought more than we sold in terms of the change, although that makes sense to a degree as the US buys more than it sells to the outside world overall.

Despite all the 'tough talk' in Washington and Beijing, China became an even more important trading partner with the United States. The percentage of total U.S. goods trade grew, and it grew bilaterally.

The growth of imports from Vietnam grew significantly, from $9.2B in June to $10.1B in July. However, exports to Vietnam declined from $0.73B to $0.71B. This is very one-sided trade.