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The monthly improvement in the U.S. deficit in March revealed in today’s official U.S. trade report was first and foremost an energy story – not that other noteworthy developments couldn’t be found, specifically records in manufacturing and in American trade with several leading partner countries and regions, and big changes in goods trade with China.

The combined goods and services trade gap narrowed sequentially on month by 9.08 percent, from an upwardly revised $70.64 billion to $64.23 billion. The March total was the lowest since November’s $60.65 billion.

Moreover, the deficit shrank in the best possible way. Total exports rose by 2.12 percent, from a downwardly revised $250.84 billion to $256.15 billion, while total imports dipped (and for the second straight month) by 0.34 percent, from an upgraded $321.48 billion to $320.38 billion. And this trade deficit progress took place when the economy was still growing (albeit at a significantly slowing rate).

And of the $5.31 billion sequential increase in total exports, $4.68 billion (88.14 percent) came in the petroleum products category. In fact, these foreign sales grew at the fastest monthly rate (21.26 percent) since March, 2022 (28.22 percent).

Largely as a result, the goods deficit tumbled in March by 6.92 percent, from $93.03 billion to $86.59 billion – their lowest level since last November, too. ($83.02 billion).

Indeed, petroleum products exports accounted for 89.66 percent of the $5.22 billion expansion of goods exports. On a relative basis, these foreign sales climbed by 3.09 percent, from a downwardly revised $169.09 billion to $174.31 billion.

Goods imports, meanwhile, decreased for the second straight month as well, by 0.47 percent, from a downwardly revised $262.12 billion to $260.90 billion.

The longstanding surplus in services trade slipped in March by 0.11 percent, from a downwardly revised $22.39 billion to $22.37 billion – the lowest level since October’s fractionally higher figure.

Services exports improved by 0.11 percent, from a downwardly revised $81.75 billion to a second straight record of $81.84 billion. The new total topped the old $81.32 billion mark from last December by 0.65 percent.

Services imports, meanwhile, advanced by 0.20 percent, from a downwardly revised $59.36 billion to $59.48 billion – the second highest total ever behind last September’s $59.55 billion.

The huge and longstanding U.S. goods trade deficit with China became a good deal less huge in March, sinking for the second straight month – and by 12.59 percent, fom $19.00 billion to $16.61 billion. Further, that total was the lowest since the $15.76 billion hit in February, 2020 – when China’s economy was still grappling with the devastating first wave of the CCP Virus.

U.S. goods exports to the People’s Republic shot up by 22.06 percent sequentially in March – from $11.62 billion to $14.18 billion. The new total is the highest since last November’s $15.58 billion, and the rate of increase the fastest since last October’s 31.33 percent.

For some perspective, though, this big March increase followed a sizable 11.26 percent decrease in February.

U.S. goods imports from China inched up for the second straight month, but by just 0.55 percent, from $30.62 billion to $30.79 billion. And those two totals are the lowest since early in China’s recovery from that first 2020 virus wave.

Most strikingly, on a year-to-date basis, the U.S. goods deficit with China has cratered by a whopping 39.85 percent, from $101.04 billion to $60.77 billion.

These results, moreover, clash loudly with those of the U.S. worldwide non-oil goods trade – which as known by RealityChek regulars is a close proxy for U.S.-China goods trade.

The U.S. non-oil goods deficit (which can also be considered the “Made in Washington” deficit because it tracks trade flows most strongly influenced by U.S. trade deals and other policy decisions) worsened by 0.19 percent between February and March – from $92.19 billion to $92.36 billion. So China goods trade performed better sequentially on this basis.

U.S. goods exports to China were up in March much faster than the 0.25 percent gain in non-oil goods exports (from $145.80 billion to $146.16 billion).

As for non-oil goods imports, they increased by just 0.23 percent in March (from $237.98 billion to $238.52 billion) – not dramatically different from the China goods performance.

But the year-to-date contrast is enormous. Whereas the U.S. goods deficit with China nosedived by nearly 40 percent, for non-oil goods trade, it fell by less than half that – 17.80 percent, from $336.25 billion to $276.40 billion.

That makes it hard to avoid concluding that the Trump (now Trump-Biden) tariffs keep punishing China (along with Beijing’s own-goals ranging from last year’s wildly over-the-top Zero Covid policies to increasing harassment of U.S.- and other foreign-owned companies) but not simply by diverting imports and trade to other countries and regions. Domestic American producers must be getting some of that old China business as well.

The manufacturing trade deficit, however, worsened by 9.08 percent in March, from $100.05 billion to $109.64 billion. True, this increase followed a 14.36 percent drop in February, but it can’t be good news given the sector’s recent weakness.

Interestingly, this deterioration reflected major changes in both monthly exports and imports. The former soared by 18.91 percent, from $98.06 billion to a new record $116.60 billion (which topped the previous mark of $114.78 billion set last June by 1.58 percent).

Industry’s foreign purchases jumped by 14.20 percent, from $198.10 billion to $226.24 billion.

Big monthly changes and a record were also recorded in Advanced Technology Products (ATP) trade in March. The ATP deficit dropped from $16.23 billion to $14.31 billion. The 11.82 percent narrowing brought the gap to its smallest since February, 2022’s $13.42 billion.

ATP exports shot up from $29.12 billion to a new all-time high $38.33 billion. And the 31.65 percent increase was the most dramatic since March, 2002’s 31.94 percent.

Imports surged, too – by 16.09 percent, from $45.35 billion to $52.65 billion. And that upswing was he fastest since the 33.64 percent burst of last March.

On the regional and bilateral fronts, many of the most dramatic developments came in U.S. goods trade with Europe.

America racked up its biggest exports total ever to the European Union ($34.96 billion – 12.04 percent greater than the $31.20 billion level hit last March) and bought its second greatest total of imports ($50.82 billion, a number trailing only last October’s $53.07 billion).

The volatile U.S. surplus with the Netherlands skyrocketed by 116.40 percent on month, from $1.84 billion to $3.98 billion, keyed by record exports of $7.76 billion. That smashed the previous mark of $6.96 billion by 11.50 percent.

U.S. goods exports to Germany achieved an all-time high, too, with the $7.50 billion figure exceeding the old record of $6.62 billion, set last March, by 13.20 percent.

The U.S. goods deficit with Mexico reached its highest ever, too, in March, with the $13.55 billion total coming in 8.25 percent higher than the old record of $12.57 billion from August, 2020. American goods sales to Mexico totaled $29.27 billion – their second best performance ever after last August’s $29.98 billion. But imports reached a new record of $42.82 billion – 5.87 percent greater than last March’s $40.45 billion mark.