By Yuka Hayashi 

WASHINGTON -- The U.S. trade deficit widened in January as American consumers stepped up purchases of computers, cellphones, flat-screen TVs and other imported products.

The deficit in trade of goods and services expanded by 1.9% to a seasonally adjusted $68.2 billion in January, the Commerce Department said Friday, compared with a $66.97 billion gap in December.

Imports increased 1.2% to $260.2 billion from December, while exports grew 1.0% to $191.9 billion. Imports have returned to pre-pandemic levels after dropping sharply starting in March.

Americans splurged on consumer goods in January, helped by $600 payments many received as part of the latest round of government stimulus spending to fight the impact of the pandemic. Retail sales jumped a seasonally adjusted 5.3% in January from the previous month, the biggest increase since June. Imports of pharmaceuticals rose sharply in January, and higher prices drove up the value of imported crude oil and petroleum products.

With the global economy recovering, exports also expanded modestly, bolstered by shipments of petroleum products, industrial machinery and semiconductors. Many countries loosened restrictions on economic activity at a quicker pace as Covid-19 cases fell sharply from their peak around the new year.

"Trade flows continue to recover and will pick up once the global economy reopens," Rubeela Farooqi, chief U.S. economist for High Frequency Economics, said in a research note. She added that imports are likely to outweigh exports in the near term because of the relatively strong recovery in the U.S. economy.

While shipments of goods recovered, trade in services remained depressed amid continuing travel restrictions. Exports of services declined by 0.5% to $56.3 billion in January from December. Imports of services fell 0.9% to $39 billion.

In January, the U.S. deficit in trade in goods with China declined to $26.25 billion from $27.23 billion in December. Exports to China fell 12.2% to $12.86 billion, while imports declined 6.6% to $39.11 billion.

Under the so-called Phase One trade agreement signed with the Trump administration, China committed to boosting its imports of certain U.S. products in agriculture, manufacturing and energy by a combined $200 billion between 2020 and 2021.

China fell far short of its purchase goal for 2020, and its imports of covered products in January came to $9.82 billion, down from and average of $11.2 billion in the previous three months, according to an analysis by Panjiva, a research unit of S&P Global Market Intelligence.

The company projects China must increase its monthly imports of the covered items to an average of $14.8 billion to meet its purchase goal for 2021.

Katherine Tai, who is expected to be confirmed as U.S. Trade Representative in coming days, said during a Senate hearing last week that she would use all tools available to "ensure that China lives up to its obligations in the agreement."

Write to Yuka Hayashi at


(END) Dow Jones Newswires

March 05, 2021 11:26 ET (16:26 GMT)

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