TTM Trade Deficit Collapses to pre-2001 Levels Relative to GDP

The Trade Deficit is one of the two components of the ‘twin deficits’; the other being the federal budget deficit. The trade deficit used to be a number that received a ton of attention in the 1980s and 1990s because it was determined to be a strong gauge of the strength and weakness in the US economy. It was last positive in 1975, but big moves in the trade deficit through the 80s and 90s impacted the stock market.

Lately, not many people focus on the trade deficit numbers; however, it is still an excellent metric for identifying how the US is performing. How much more are we consuming than we are producing? It also allows us to export our inflation abroad. If the rest of the world decides to stop making things for us, then it could be an ugly transition.

Current Trends

The February trade deficit came in at -$57B. While this deficit is about average compared to recent months, it is still historically smaller than what was being seen before Liberation Day and the tariffs set in. The data is only through February, which was the same month that the tariffs were struck down. This means the data shown here does not yet reflect the lifting of tariffs, nor the application of the temporary tariffs Trump put in place after the ruling.