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U.S. Trade Tumbles 30% — And, More Troubling, Gold Is New Top Import

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U.S. trade fell a startling 29.83% from the same month last year and, for the first time, gold was the most valuable import, according to Census Bureau data released Thursday for the month of May.

While the trade data is riddled with troubling data — the May decline is nearly 50% greater than the 20.91% decline in April — it stood in stark contrast to employment numbers also released on Thursday. The government announced the U.S. economy added 4.8 million jobs in June, initially sending a stubbornly upbeat market upwards.

The trade data tells a sharply different story, even though they are for similar periods, since the employment data is measured through mid-June, or an additional two weeks beyond the trade data.

In that data, gold is a big red flag. It attracts buyers frightened by the economic outlook, sending the price higher. The value of gold imports increased more than 1,700% over the previous month of May, replacing computers as the top U.S. import.

Passenger vehicles have traditionally been the top U.S. import but those were down 76.88% when compared to the previous May, slipping to a rank of No. 10.

Until March, gold imports had topped $2 billion in a month only three times this decade. In March, the total was $3.07 billion, followed by $7.54 billion in April. The total for May was $8.77 billion. Imports in those three months top the previous annual record, set in 2016.

Just as troubling is the percentage of U.S. trade that is an export. That percentage, 36%, is almost certainly the lowest percentage ever. This is as important, if not more important, than the widely watched trade deficit figure, which is the difference between exports and imports.

It’s clear why, when viewed in tandem. The U.S. trade deficit is decreasing this year. Deficit hawks might herald that news. But it can sometimes mask what’s really happening — in this case, that the size of the trade “pie” is shrinking, which is reducing the deficit in actually dollars, while exports are falling faster, relative to imports.

All that gold entering the United States is coming from Switzerland, traditionally a destination for U.S. gold exports, and largely entering at JFK International. For the second month in a row and only the second time ever, JFK is the nation’s top trade gateway, among more than 450 airports, seaports and border crossings.

Between the U.S.-China trade war, the pandemic and ensuing economic troubles, the United States has had four different No. 1 gateways in 2020. Traditionally and for hundreds of months, the United States had only one top gateway: the Port of Los Angeles.

Port Laredo, a key conduit for U.S. trade with Mexico, and Chicago’s O’Hare International, a key conduit for both U.S.-China trade as well as coronavirus-related supplies, also have ranked No. 1 this year.

For the month of May, JFK was followed by O’Hare, the Port of Los Angeles, the Port of Newark and Los Angeles International Airport, where trade is off only 7.33 percent in May, roughly a quarter of the U.S. average.

Port Laredo slipped to No. 7, behind the Port of New Orleans.

Port Laredo fell because more than 90% of its trade is with Mexico, not surprising for the border town. U.S.-Mexico trade was off 53.58 % in May, when compared to the previous May.

Much of that loss is tied to the highly integrated North American automotive industry.

Ranked as the nation’s top trade partner for the first time in 2019, largely due to the impact of the U.S.-China trade war, it ranked third in May, trailing Canada, with which trade was off 44.56%, and No. 1 trade partner China. U.S. trade with China was down just 4.15% in May.

Year-to-date, Canada is the nation’s top-ranked trade partner because its U.S. trade only began to tumble when the top U.S. import from its northern neighbor, oil, began collapsing on global markets.

Year-to-date, U.S. trade with the world is down 13.57%, less than half the decline for the month of May.

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