Far exceeding expectations! The US trade deficit in January plummeted to $545 billion, with strong exports being the main reason.

The latest data released by the US Department of Commerce on Thursday showed that driven by a significant increase in exports, the US trade deficit in goods and services narrowed significantly in January, far exceeding market expectations. Specifically, the trade deficit in that month narrowed by over 25% compared to the previous month, dropping to $54.5 billion, which was significantly better than the median of $66 billion as surveyed by economists. In January, exports increased by 5.5% compared to the previous month, with strong external demand mainly coming from non-monetary gold, other precious metals, computers, and civilian aircraft; in contrast, imports slightly decreased by 0.7%, with varying degrees of decrease in the import volumes of pharmaceuticals, automobiles, and industrial goods. The dramatic fluctuations in this trade data are closely related to the turbulent policy environment in the past. Last year, due to the impact of US importers responding to the Trump administration's series of tariff announcements, trade flows showed significant monthly fluctuations. The Trump administration attempted to use higher import tariffs as a core policy tool to reduce reliance on foreign goods, encourage domestic investment, and reverse the decades-long decline in manufacturing. In terms of timing, the tariff rates remained unchanged in January, but this status only lasted until February 20 when the US Supreme Court overturned several tariff measures of the Trump administration. This ruling forced the president to reimplement these tariffs through different authorizations. Studies indicate that a key issue in 2026 is whether retailers will rebuild their inventories by increasing imports or shifting towards domestic production. Meanwhile, the US-Israeli war with Iran launched on February 28 is also bound to affect shipping and trade with Middle Eastern countries. The latest trade data will provide a key basis for economists to revise their first-quarter GDP forecasts. Previously, the Atlanta Federal Reserve's GDPNow model showed that net exports could drag down GDP growth by 0.5 percentage points in the current quarter, with net exports in the fourth quarter of last year making almost no contribution to economic growth. In terms of specific data, after adjusting for inflation (taking into account real GDP accounting), the goods trade deficit narrowed to $83.9 billion in January. Looking at the country structure, the trade deficit with China slightly expanded compared to the previous month, although this indicator had already narrowed to its lowest level in over twenty years last year; meanwhile, the trade deficits with Canada and Mexico showed a trend of narrowing. Another set of economic data released on Thursday showed that there was little change in the number of initial jobless claims in the US last week, while housing starts in January saw an increase due to the construction of new multifamily residential projects.