PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

Trade Continues to Struggle in the COVID Economy

By at 8 October, 2020, 9:21 am

by Raymond J. Keating-

Costly policy measures prior to the pandemic served as a drag on the economy. Then COVID-19 hit and made matters worse. The latest trade data show that both exports and imports struggle to recover.

Data from the U.S. Bureau of Economic Analysis “U.S. International Trade in Goods and Services August 2020” report show that U.S. exports of goods and services declined in 2019, as did imports. And while monthly exports were down slightly in January and February of this year compared to December 2019, they plunged in March, April and May. The May 2020 level of U.S. exports stood at the same level as, for example, October 2009, that is, more than a decade earlier.

Source: Federal Reserve Bank of St. Louis, FRED

As for imports, they suffered declines in January and February, with the falloff greatly accelerating in March, April and May. The May 2020 level was the same as what prevailed in mid-2010.

And compared to a year earlier, monthly exports in August 2020 were down by 18.3 percent, and imports were off by 8.5 percent.

The recovery in trade thankfully began in June and July. However, the rate of growth slowed notably in August, especially for exports.

Looking ahead, it is vital for the U.S. to get back to playing a leadership role in reducing governmental barriers to trade via free trade agreements. Those reduced barriers and costs will expand opportunities for U.S. consumers, entrepreneurs, businesses and workers.

When government obstacles – such as tariffs and quotas – are increased, trade and the economy suffer. Reduce those barriers, and trade will flourish and feed overall growth.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

 

News and Media Releases