US: Trade deficit narrows in March but on a 12-month basis is getting worse - NBF

Krishen Rangasamy, analyst at National Bank of Canada, points out that despite the smallest trade deficit since September 2017, 12-month cumulative basis shows that is actually getting worse. 

Key Quotes:

“The U.S. trade balance reportedly narrowed to just under US$49 bn in March, the smallest trade deficit since September of last year. Does that mean the U.S. government’s pressure tactics against trade partners are finally succeeding in reducing the trade deficit? Hardly. Trade data are notoriously choppy and prone to revisions, meaning that one is better served by looking at trends rather than monthly movements. On a 12-month cumulative basis, the U.S. trade deficit is actually getting worse.”

“What could turn the U.S. trade deficit around is either the implementation of trade barriers such as tariffs (which would effectively force Americans to buy U.S.-made goods) or a major economic slowdown (which would prop up savings à la 2008/2009). Those two possibilities are not mutually exclusive because the former is likely to cause the latter.”