The US trade balance registered a deficit of US$ 65.5 billion in June, after showing a deficit of US$ 68.3 billion in May, according to the country’s Department of Commerce. Analysts had expected a $65.0 billion deficit in June.
Exports totaled US$ 247.4 billion in June, which represents a drop of 0.14% in relation to May and 4.28% compared to June of last year. Imports reached US$ 312.9 billion, a decrease of 0.9% in monthly terms and 7.7% in annual terms.
The US trade deficit with China – which has the largest volume of trade with the United States – was US$ 24.111 billion in June, which represents a drop of 4.3% compared to May and 34.8% % compared to June 2021.
The deficit with European Union (EU) countries totaled US$ 19.139 billion, up 4.3% in monthly terms and growth of 6.4% on an annual basis. In relation to Brazil, the United States had a surplus of US$ 412 million, a drop of 54.4% in relation to May and 73.6% less than the surplus of US$ 1.564 billion of June 2022.
Falling exports from China is the new warning sign for the world economy
Foreign trade with China shrank in July, amid a slowdown in global demand for its products and a dubious economic recovery that weighs on consumption in the country.
The total value of exports sank 14.5% last month from a year earlier, the worst decline since February 2020, while imports fell 12.4%, the country’s customs administration said on Tuesday.
In both cases, the numbers were worse than expected by economists polled by Bloomberg. The trade balance was US$ 80.6 billion in the month.
The deepening decline in imports “is a reflection of weak domestic demand,” said Zhang Zhiwei, chief economist at Pinpoint Asset Management. The drop was the worst since January. “Overall consumption and investment growth has likely remained quite weak in China.”
Chinese stocks listed in Hong Kong led losses in Asia on Tuesday. Singapore-traded iron ore futures, already down more than 20% since their mid-March peak, fell further but held above $100 a tonne.
China’s economic recovery this year was expected to be driven by domestic demand, but the housing market downturn has hit construction and consumption growth has slowed. This led to a fifth consecutive month of falling imports.
On Wednesday, inflation data is likely to show that consumer prices declined in July, reinforcing evidence of weak domestic demand.
Some economists also attributed the decline in imports to falling commodity prices. The total value of oil imports, for example, fell more than 12% in the first seven months of the year, but the volume jumped about 12% in the period.
The drop in exports was driven by shipments to the United States, which dropped 23.1% in July. Exports to other markets including Japan, South Korea, Taiwan, the European Union, Brazil and Australia also saw double-digit declines.