US trade gap tops $68 billion, widest in almost a year

The U.S. trade deficit widened to $68.9 billion in February, the largest disparity since last April, as import values exceeded exports by more than analysts were expecting.

The trade gap on goods increased by $300 million to $91.4 billion, while the export surplus on services decreased by $1.6 billion to $22.5 billion, according to Commerce Department data released Thursday.

The total value of imports hit $331.9 billion while exports were $263 billion, marking an overall deficit expansion of 1.9 percent on the month.

The trade gap spiked above $100 billion in 2022 in the aftermath of the pandemic, after hovering around $40 billion over the past decade. It was trending to renormalize but may have hit an inflection point last August when it began rising once again.

While distorted supply chains and new directions in U.S. trade policy have generated discussion across industries, analysts say that supply disruptions have mostly resolved. 

“Despite the headlines, there is not much evidence of trade patterns being meaningfully disrupted by shocks,” UBS economist Paul Donovan wrote in a Thursday commentary.

The Federal Reserve’s global supply chain pressure index is now around zero, indicating little stress on trade flows.

Frustration on trade has been brewing among Republicans, who have called U.S. agricultural trade strategy “unambitious” and expressed frustration with initiatives undertaken by U.S. Trade Representative Katherine Tai.

“We expect trade to fluctuate in response to macroeconomic factors and market conditions,” Republican senators wrote in a letter to Tai in March. “However, the current sharp decline in U.S. agricultural exports is directly attributable to and exacerbated by an unambitious U.S. trade strategy that is failing to meaningfully expand market access or reduce tariff and non-tariff barriers to trade.”

February trade data shows a year-to-date decline of $729 million in the foods, feeds and beverages category of national exports. Soybean exports dropped by $1.9 billion, wheat dropped by $429 million and dairy products by $97 million.