How the pandemic is reshaping the US trade outlook

The fiscal and monetary response to the pandemic will leave a lasting mark on the net trade position of the US. The trade deficit is at record levels and is expected to widen by $248bn in 2021, to 3.7% of GDP in 2021, driven by a flood of imported goods while the economic struggles of our trading partners has led to a dampening of demand for exports.

What you will learn:

• Our baseline sees imports growing 14% in 2021, and cooling to a 4.7% pace in 2022. Exports, meanwhile, will grow a softer 5.1% this year, but the pace of growth is expected to double to 10.1% next year.
• While goods imports and exports are well above pre-virus levels, the recovery in goods exports will lag. Factoring in a slower normalization of services trade, we expect both services imports and exports to heal fully by Q2 2022.
• Despite our expectation that trade will continue to normalize, risks to the outlook include Covid-impaired supply chains, potential consumer caution as the Delta variant surges, and still-elevated tensions between the US and China.