What is the role of the COVID-19 pandemic in the US trade deficit?

What is the role of the COVID-19 pandemic in the US trade deficit?

Expert Solution

COVID-19 pandemic has shaken the economy. Due to coronavirus pandemic small industries and businesses has impacted which has slowed down the economy. The spread of Covid-19 tends to cause a negative supply shock to the global economy, by forcing industries to shut down and disrupting the international supply chains. Moreover the outbreak of Covid-19 causes a demand-driven slump, widening the supply-demand doom loop. A fall in the imports and exports has been mainly due to the ongoing global slowdown, and it mainly got aggravated due to the current pandemic. In April US trade deficit surged as the Coronavirus pandemic upended the flow of products and services globally, causing the country's exports to a 10-year low. The U.S. trade deficit increased nearly 16.7 per cent to $49.4 billion. There is shrinkage in the import as U.S. waged a trade war with China and restrictions due to the Covid-19.

Rahul Sunny answered 1 year ago

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