US Goods Trade Deficit Shrinks More Than All Expectations In June

  "ONLY 85 billion dollars of deficit in goods in a the US in June!" 

  "A win for Trump!"

  This is what is called "economic news" these days. Amazing indeed! 

  So we are supposed to believe that after front running tariffs with 150 billion + for 3 months, back to "normal" deficit is great news? Only at the top of a market bubble will whatever is not abyssal be considered "good news". Oh and whatever conversely is abyssal is also good news because it will oblige the FED to react and lower interest rates.   

  As we have explained many times, as "responsible" for the world currency, the US cannot not have a huge deficit if only because it needs to provide liquidity for the rest of the world. It is both a blessing (free money) and a curse (deindustrialization) which is why no one in his right mind will want to replace the dollar short of a cataclysm, especially China which would very quickly see a huge spike in the value of the Yuan and of unemployment as jobs and investments move to Vietnam and other countries. 

  Imagine we get a deficit of "only" 75 billion dollars next month. This would be announced as another "great" news. "The Trump strategy is working!" Except that the world would now be starved of dollars and short of a recession (likely) the price of the currency would rise which would allow the FED to lower interest rates at last but would also make US goods less attractive around the world.  

 So expect every micro move to be welcomed as great news from now on although fundamentally, nothing much will change because nothing much can change... and the deficits will keep rising inexorably, ever closer to monetary abyss.   

US Goods Trade Deficit Shrinks More Than All Expectations In June

The US merchandise-trade deficit shrank in June by more than expected, reflecting a broad decline in imports as the pre-tariff rush to secure goods unwinds.

The shortfall in goods trade narrowed 10.8% from the prior month to $86 billion...

Source: Bloomberg

This deficit was smaller than all economists' forecasts...

Source: Bloomberg

Imports fell 4.2% to $264.2 billion, including the smallest value of inbound shipments of consumer goods since September 2020.

Imports of industrial supplies and motor vehicles also fell. US exports of merchandise decreased 0.6%.

Source: Bloomberg

In addition to the merchandise-trade data, the latest advance economic indicators report showed retail inventories rose 0.3% last month, the most since September and reflecting a surge at car dealers. Stockpiles at wholesalers climbed 0.2%.

More complete June trade figures that include the balance on the services account are due Aug. 5, but for now, this seems like a win for President Trump.