https://www.wsj.com/economy/trade/us-trade-import-export-deficit-charts-490a7bce?mod=hp_lead_pos7
The Countries Fueling America’s $1.2 Trillion Goods Trade Deficit, in Charts
Growing gaps with Mexico and Vietnam add to the biggest imbalance the U.S. faces—with China
The U.S. imported $1.2 trillion more in goods in 2024 than it exported, a record annual deficit and a major economic irritant for President Trump. On Feb. 13, the president announced that his administration would evaluate tariffs and other trade barriers imposed on U.S. exports by other nations and match them with “reciprocal” tariffs. The president said last week that 25% tariffs on Canada and Mexico would go into effect Tuesday…
The monthly goods deficit has been on a tear—to the downside. Preliminary census numbers for January show that, after hitting a record $123 billion in December, it rocketed to $153 billion as businesses raced to import goods ahead of tariffs. The U.S. runs a steady trade surplus in services, which in 2024 left the overall goods and services deficit at about $918 billion…[end quote]
The article contains many charts and details of individual countries.
The tariffs can hurt U.S. businesses that import parts. The uncertainty has been impacting the stock market though not to a large degree…yet.
Ultimately, all tariffs will be borne by the consumer. This will increase consumer price inflation which will make the Fed less likely to cut the fed funds rate. PCE inflation came in slightly lower last week but still well above the Fed’s benchmark 2%.
The stock market has shown weakness over the past couple of weeks as bullish percent fell and VIX rose.
At the same time, Treasury prices fell along the entire yield curve. The 2YT now yields less than the 3 month Treasury, often a signal of recession. The rest of the yield curve is positive.
The trade is risk-off as stocks fell while Treasury prices rose. The USD gained. The Fear & Greed Index is in Extreme Fear.
There is a lot of uncertainty coming out of Washington, DC as DOGE is cutting the federal workforce, including the IRS and Social Security, during tax season. Lawsuits have been filed but there’s no telling how they will turn out or if the executive branch will obey the rulings.
The METAR for next week is cloudy. There’s a lot of uncertainty and no good news. The stock market is still in a bubble. The “Magnificent 7” are most vulnerable and the drop in the Naz may or may not be the start of a serious drop.
Wendy