The Census Department reports two new records trade deficits in January. 
For those who appreciate record-breaking efforts, I am pleased to report the International Trade in Goods and Services report for January has many new records to consider.
Trade Details
- January exports were $269.8 billion, $3.3 billion more than December exports. January imports were $401.2 billion, $36.6 billion more than December imports.
- The January increase in the goods and services deficit reflected an increase in the goods deficit of $33.5 billion to $156.8 billion and an increase in the services surplus of $0.2 billion to $25.4 billion. The goods deficit and the goods and services deficit are two new records.
- Year-over-year, the goods and services deficit increased $64.5 billion, or 96.5 percent, from January 2024. This is a new record too.
- Exports increased $10.6 billion or 4.1 percent. Imports increased $75.2 billion or 23.1 percent.
Real Goods in 2017 Dollars – Census Basis
- The real goods deficit increased $30.8 billion, or 27.5 percent, to $142.9 billion in January, compared to a 27.4 percent increase in the nominal deficit. This is a new record.
- Real exports of goods increased $0.6 billion, or 0.4 percent, to $142.3 billion, compared to a 1.6 percent increase in nominal exports.
- Real imports of goods increased $31.4 billion, or 12.4 percent, to $285.2 billion, compared to a 12.5 percent increase in nominal imports.
In retrospect, I am not sure how many new records we set in January.
Some of you might be wondering where, if anywhere we are winning. In Trump parlance, winning means trade surplus.
Goods by Select Countries and Areas Surpluses
- Netherlands +$4.3 Billion
- South and Central America + $4.3 Billion
- Belgium +$0.6 Billion
- Brazil +$0.6 Billion
What about losing? In Trump parlance, losing means trade deficits.
Goods by Select Countries and Areas Deficits
- China ($29.7), European Union ($25.5), Switzerland ($22.8), Mexico ($15.5), Ireland ($12.4), Vietnam ($11.9),
Canada ($11.3), Germany ($7.6), Taiwan ($7.5), Japan ($7.4), South Korea ($5.4), India ($4.2), Italy ($3.5),
Malaysia ($2.5), Australia ($2.0), Hong Kong ($1.4), France ($1.0), Singapore ($1.0), Israel ($0.6), United
Kingdom ($0.5), and Saudi Arabia ($0.1).
Notable Changes
- The deficit with Switzerland increased $9.8 billion to $22.8 billion in January. Exports increased $0.6 billion to $1.8 billion and imports increased $10.3 billion to $24.6 billion.
- The deficit with Ireland increased $6.2 billion to $12.4 billion in January. Exports increased less than $0.1 billion to $1.2 billion and imports increased $6.2 billion to $13.6 billion.
- The deficit with India increased $3.4 billion to $13.2 billion in the fourth quarter. Exports decreased $0.2 billion to $20.6 billion and imports increased $3.2 billion to $33.8 billion.
- The deficit with the European Union decreased $5.8 billion to $38.5 billion in the fourth quarter. Exports decreased $0.9 billion to $164.8 billion and imports decreased $6.7 billion to $203.3 billion.
What’s Going On?
- The new records are all related to front-running imports to avoid tariffs.
- Switzerland is related to front-running gold to avoid tariffs.
- Ireland is related to front-running pharmaceuticals to avoid tariffs.
What About Gold?
Brad Setser commented “About half of the $67 billion increase in imports from last January is from “finished metal shapes” (probably gold bars) and non monetary gold. Imports from Switzerland also soared.”
January 2024 year-to-date on finished metal shapes was 3,030. In 2025 it’s 31,200. I believe that will be considered monetary gold by the BEA when it comes to calculating GDP.
BEA Adjustments for Gold
Gold is used for two purposes: for industrial demand (as an input into the production of goods and services, such as jewelry, watches, and electronic equipment) and for investment (as a store of wealth and a hedge against inflation). In the NIPAs, all domestic production of gold, regardless of its final use, is included in GDP. However, the NIPAs do not treat transactions in valuables, such as gold, as investments in fixed assets, and so investments in gold (other than gold held in industrial inventories) are not reflected in gross domestic purchases (PCE, gross private domestic investment, and government consumption expenditures and gross investment).
For example, if households purchase gold as a form of investment, including that purchase in PCE would distort the analysis of consumption and saving. In contrast, in the international guidelines presented in the System of Accounts 2008 (SNA), the capital account includes the net acquisition of gold and similar valuables (such as antiques and other art objects) that are held as stores of value in gross fixed capital formation as “Acquisitions less disposals of valuables.”
Only a small share of the international transactions in nonmonetary gold recorded in the ITAs is for business or industrial use; most transactions are for investment or other purposes. Consequently, the NIPA estimates for exports and imports of nonmonetary gold are not based on the ITA estimates. Instead, the NIPAs incorporate a special adjustment for transactions in gold.
The above is from BEA Net Exports of Goods and Services.
How Did Gold Imports Exacerbate the Huge Decline in GDPNow Nowcast?
On March 5, I asked How Did Gold Imports Exacerbate the Huge Decline in GDPNow Nowcast?
Pat Higgins, creator of GDPNow commented:
The GDPNow model doesn’t adjust for gold imports/exports. In the GDP accounts, the BEA does make adjustments for gold as described on pages 8-13 and 8-14 of BEA Net Exports [above link] when the translate the Census data on imports/exports the GDP based measures.
I believe the safest thing for now is to factor out trade data from GDPNow.
Net trade accounts for about -3.0 PP of the decline in GDPNow starting February 28.
On March 5, I arrived commented “If we factor out imports by adding 3.0 PP to the GDPModel model, we arrive at a Mish-adjusted base forecast of +0.20 percent and Real Final Sales of -0.20.“
That is one hell of a plunge even factoring out trade data completely.
I will update my calculations soon. There is a slight improvement today.
Meanwhile, the economy mostly continues to weaken, especially jobs. ISM services improved.
Related Posts
March 6: Continued Unemployment Claims Jump by 42,000 Expect Worsening Conditions
Initial claims fell but continued claims rose. Due to DOGE, both will soon surge.
March 6: ISM Services Stronger than Expected with Hot Prices
The price component of ISM services was over 60 for the third month.
March 6: ADP Private Employment Up a Weaker than Expected 77,000
The Bloomberg consensus was 162,000 so this was a very weak report.
Mish Take For Now
- The slowdown in jobs will matter more than price hikes due to tariffs. Bond yields at the long end will decline modestly.
- My alternate second take is lingering stagflation lite.
- I rule out door number 3, a soft landing. Indeed, we may have a very hard landing due to tariff madness.
- The “No Landing” (up, up, and away) door number 4 scenario that worked for a long time is now dead.
Base Case: A Global Trade War Has Started – Global Recession Will Follow
Almost Everything Has Doubled Under The Democrats/Rhinos.
Housing, Rent, Insurance, Property Taxes, Health Care, Groceries,
Gasoline, Diesel, Vehicles, Utilities, Wood/Building Supplies, Etc.!
Core Inflation – Excludes ‘Volatile’ Food & Energy Prices.!
Prices Will Now ‘Triple’ Under Sanctions & Tariffs.!
And interestingly every single price increase was made by a CEO, not a politician. Yet we’ve been conned into blaming the politicians.
Switzerland main export to the US: pharma products, vaccines, blood, antisera, watches and high end jewelry
I’m on my knees…
Praying to the almighty whomever
Thanks be to thee
I don’t like eggs
Fried, no thank you.
Easy under, under might be good, but rarely is.
Easy over, over what? Medium over? Hard over?
Get a life already.
Omelet, what is that, French?
“Freedom” eggs I might like, i doubt it
Scrambling no thanks, uncle frank had scrambled brains. Not good. Ever.
Frittatta, is that Italian?
Love Italian, pasta, et. al.
not eggs…
Strata? American!!! Never mind, too many eggs, not enough time!
Quiche! What? French again?! I thought we covered that with the Omelet!!!!
Raw eggs? Like ROCKY!!!!
IMMA GONNA MAKE A RAW EGG SMOOTHIE LIKE ROCKY!!!!
Eye of the egg laying tiger!
Wait, ROCKY ate smoothies?!.
That can’t be right?
In my version of ROCKY he’d be eating BALUT!!!!
MABUHay!!!!
I’m not that ethnicity but damn proud to be called an honorary member.
Hard boiled. If I was going to like an egg it would most definitely have to be HARD BOILED.
Mish is an hard boiled egg, certainly not any other kine…
Poached! Imma gonna go poach me some eggs!!!!
Like poaching, don’t like eggs, so…
Eggs Benedict! We know our fearless potus salutes Benedict Arnold every morning? Still, the best part is that sauce and the bread thingy….
Soft boiled! I almost loved my wife’s version of soft boiled eggs spread all over Foccacia! Then I remembered I didn’t like eggs, so no thanks. Now I have to pretend I like them for the rest of my life…..
Easy to see why I do not like green eggs with ham!
Million eggs imported for a trillion dollars?
Why didn’t I think of that?
Sleep well comrades.
Eggs ‘Were’ The Cheapest Natural Protein Available.!
Trump is not only administering a massive and nasty stagflationary shock to the US economy, he is also destroying US export brands and prospects for years to come. American exports products are increasingly seen in Canada, Mexico, China, and Europe as symbols of the cupidity/stupidity of Americans. I guess we will have to live in splendid isolation for some time.
Let’s hope the Canadian and the Mexican learned their lesson or the next round of tariffs will be even harsher Nero the clown warned.
“The new records are all related to front-running imports to avoid tariffs.”
And so why are we making this into a big deal? What matters more is what happens over the next 6 months or so. It sure seems reasonable that by the time we get to the March data that the trade deficit is going to narrow sharply. Then, it’s going to level out, possibly at a level that is a bit below the norm over the last 2-3 years.
For or against the tariffs the implementation and back and forth is piss poor. Its not helping anything.
I’ll take the converse on this. I think Trump & his team knows tariffs aren’t something to be taken lightly, especially with MX & more so CA. I would much prefer them to get it right with some back & forth allowing for compromise on both sides, even if this means some delays / on-off again. The point of the back & forth is to provide the opportunity for an off ramp. What he’s doing with China is much more decisive which is exactly what’s needed. The bottom line with MX at least is that there are 10K troops south of the border, and everything I’m reading says they’re having a big impact. As we all know, illegal attempts are lower than they’ve ever been in modern times.
Your point of view is fine, but IMHO I think there’s AS USUAL way too much hysteria being hyped by the mainstream media, including Mish, about the whipsawing. Everyone knows that the auto industry is the 800 lb gorilla in the room, so nobody should be surprised that it will take some more time for that level of tariff to go into effect. And from what I’ve read, the US UAW support Trump’s efforts.
Either way, I’m not buying into the hype that all of this back & forth is really causing that much economic dislocations. The most important point is that Trump is taking a much different approach than any president in modern times. And I’ll agree that there are legitimate areas for disagreement. For example, I think the layoffs should certainly follow the law, and that doesn’t seem to be the case, so Trump is starting to get hammered legally over this. Maybe this is by design? I don’t know.
Moreover, the cutting of USAID absolutely needs to happen as well as all sorts of other crazy spending, but Trump should be using the Impoundment Control Act of 1974 that authorizes him to impound Congressionally appropriated money but also requires Congressional approval within 45 days. Taking this approach would force all of Congress to go on record for all of this again outrageous spending DOGE is finding.
Well, Mish is the mind of the nation, not Blue KoolAid nor MAGA, its just straight facts, simple statistical numbers. Trust me Both KoolAid shooters read Mish!!
“The Census department” ?
Mish, what should Trump do to bring back jobs to the US, and shut down drugs? Its a hot mess. Trump is trying, but he has totally Messed up the tariffs. It can work, but he does not understand the Walmart shopper? Yea….And now I understand energy and natural resource. These need to be exempted… Well what the Freshmen were in charge. ITS A HOT MESS!!!
You mean shut down the supply of Adderall and Ketanamine that he and Musk are addicted to? I don’t think that is going to happen….
He needs to come up with a list of strategic goods that he sells to the American people & more importantly corporations that either need to be friendly shored or onshored. Them enact policies that achieve this goal. A short list would include:
Pharma, electronics, solar panels, batteries, etc
I want all the fine Chinese stuff I can get while I can still afford any.
Fascinating Kirk interview with Newsome. Worth the time.
Link?
So I’m having trouble finding the whole thing in one piece, there are several longer form clips on X if you search. Here is one.
https://x.com/bennyjohnson/status/1897714079474893192
Here are some highlights with reactions.
https://nypost.com/2025/03/06/us-news/gavin-newsom-splits-with-dems-on-trans-athletes-in-womens-sports-while-seeking-advice-from-maga-influencer-charlie-kirk/
Newsom obviously trying to now sound more moderate but judging from the vicious attacks he’s taken today, it’s going to be hard to be a moderate when the left eats it’s own.
Put some links in and it said awaiting approval