Restrictions on shopping, dining, and travel in response to the Covid-19 global pandemic significantly hurt US exports, widening the US trade deficit.
The trade deficit for goods and services increased to $44.4 billion for the month of March, up $4.6 billion, or more than 11%, from the previous month, according to new data from the US Census Bureau and the US Bureau of Economic Analysis (BEA) released today.
Both exports and imports for goods and services significantly fell during February and March of this year, much of it due to significant declines in travel and tourism. Trade exports fell by $20 billion, a drop of nearly 10% to $187.7 billion. By comparison, imports fell by $15.4 billion, or more than 6%, to $232.2 billion.
Spending by foreign visitors—which includes expenditures by border, seasonal, and other short-term workers—is a significant contributors to the US economy. While in-bound tourists and other travelers may not seem like an export sector, the money they spend is a major source of foreign exchange, and accounted for 11% of total US exports and nearly a third of all US services exports in 2017.
The impact of travel advisories or restrictions due to Covid-19 resulted in “rapid declines in the numbers of foreign travelers to the United States and US travelers abroad” and was specifically cited by BEA in a written statement. Travel and transportation represented almost all of the declines in the US trade of services.
The decrease in travel exports of $7.5 billion in March, is equal to the decreases in industrial supplies and materials, automotive vehicles, parts, and engines, and other capital goods combined. Transport services—another major export which includes sea, air, postal, trucking, maintenance and repairs—also fell by $2.6 billion for the month.
Imports of travel and transportation services also significantly declined in March, falling by $10.7 billion. The other major declines in imports were for consumer goods as well as automotive vehicles, parts and engines.
This year, international tourism to the US was expected to grow 2% to more than 80 million people, with nearly half coming from Canada or Mexico. However, data from US Customs and Border Protection shows travel from Canada and Mexico fell by nearly 70% during the month of March compared to the same time last year, and visitors from 15 other major countries including the UK, Japan, Brazil, and Germany, fell by more than 65%. The number of arrivals in the first three months of 2020 is also more than 26% lower than the same period in 2019.
Correction: This post has been updated to remove an incorrect reference to the US trade deficit being the widest in 11 years.