Canada
According to a recent Bloomberg article, the Canadian deficit last December, the largest on record, was due almost entirely to a collapse in crude oil prices.
In December last year, Canada suffered a C$4.6 billion ($3.4 billion US) trade deficit on the month more than twice the C$2 billion November deficit according to Statistics Canada. A Bloomberg survey of economists had predicted only a C$2.1 billion deficit.
During the month, exports fell 3.8 percent. However, if energy exports are excluded exports were basically unchanged. Imports rose by 1.6 percent. This was the fifth decline in a row. A record level was set in July. While Canadian crude prices rebounded this year, the trade figures come after slow GDP data which shows economic growth had stalled at the end of last year.
Late in 2018 crude prices dropped amid a supply glut, leading to Alberta mandating a cut in production. Crude exports actually fell 28.7 percent to just $3.3 billion representing the largest decline since December of 2008. In spite of the drop over 5 consecutive months. the total export values were actually up over the full year 19.7 percent over 2017.
Exports to the US, Canada’s biggest trading partner, were down 3.6 percent in December down 3.6 percent as less crude oil was exported . American imports fell 2.4 percent. As a result Canada’s trades surplus with the US was just C$1.8 billion whereas in November it had been $2.2 billion. Imports to Canada from other countries such as Brazil, China, and Russia reached a record C$19 billion.
For the full year Canada had an increase both in imports and exports compared to 2017. Imports for they year were up 5.7 percent to C$607.1 billion whereas exports rose even more 6.5 percent to C$585.4 billion actually narrowing the trade deficit to C$21.7 billion from C$24.6 billion in 2017
United States
The US Department of Commerce reports that the US trade gap widened by 19 percent last December to $59.8 billion. This was its largest monthly deficit in more than ten years. Unlike Canada this was enough to bring the deficit to the largest yearly amount ever at $891.3 billion for the year.
If services are included, the gap shrinks to just more than $621 billion over the year but that is still 12.5 percent more than in 2017.
US President Trump often complains about the US trade deficit arguing that other countries take advantage of the US by selling much more than they buy from it. His use of tariffs is intended to help remedy the situation and lead to better trade deals.
However, trade figures suggest that the US is continuing to import more than it sells. The strength of the US dollar is in part responsible for this as it makes foreign goods cheaper. It gives US consumers more purchasing power when buying foreign goods.
Derek Holt a Scotiabank economist said: “Broad dollar strength is only going to make the deficit worse despite Trump’s protestations.”
