From Goldman Sachs (Hatzius, et al.) today, interpreting today’s July trade release:
The trade deficit rose to $50.1bn in July, from a revised $45.7bn in June. Total exports fell 1.0%, as the total drop in exports ($2.1bn) was comprised primarily of declines in civilian aircraft ($1.6bn) and soybeans ($0.7bn). The decline in soybeans exports likely reflects payback following a sharp increase in June ahead of Chinese retaliatory tariffs. Total imports (+0.9%) rose, reflecting increases in both petroleum imports (+3.7%) as well as nonpetroleum imports (+0.6%).
The deterioration was in line with expectations, so no major impact on GDP predictions for 2018Q3 GDP. Figure 1 shows the nominal deficit, and normalized by GDP.
Figure 1: Nominal trade balance in billions $ SAAR (blue), as ratio to nominal GDP, cubic interpolation of quarterly data (red). NBER defined recession dates shaded gray. Source: BuCensus/BEA, BEA, NBER, and author’s calculations.
So there is little progress in shrinking the trade deficit in a meaningful way, despite the imposition of tariffs. But of course, we already knew that was going to be the case.
If you were hoping for a price increase in soybeans to boost nominal export values, well, they haven’t shown up yet.