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Commerzbank’s Volkmar Baur says AI-related capital-goods imports are structurally widening the US trade deficit. Strong foreign demand currently helps finance the gap, but weaker confidence in the United States (US) AI (Artificial intelligence) investment story could create risks for the Dollar.
AI imports and trade deficit risks
“For now, it seems safe to say that a much sharper rise – or at least a significantly higher level – in the oil price would be needed to move the fx markets significantly.”
“After the tariffs caused significant volatility in US foreign trade data in recent months, the underlying trend has become apparent again. And this trend continues to point toward a rising foreign trade deficit. Even the currently very high exports of crude oil and petroleum products (+93% yoy in USD) cannot prevent this.”
“However, the rise in oil exports points to an important development: beneath the surface, the foreign trade deficit has undergone a structural change. While for many years it was mainly consumer goods that accounted for the bulk of the trade deficit, capital goods are now responsible for the deficit. In May, imports of capital goods rose by 42.5% compared to the previous year, while imports of consumer goods fell by 9%.”
“A closer look at the details also reveals that, once again, artificial intelligence is the main driver here. Imports of capital goods rose by USD 38 bn in May compared to May of last year, accounting for 90% of the increase in imports. Nearly 33% of this amount (about USD 12.5 bn) was attributable to “automatic data-processing units” (HS 847150), such as those used in data centers.”
“On the other hand, it’s also clear that these increased trade deficits must be financed somehow. If more goods enter the country than leave it, money must be obtained from abroad to cover the difference. This is not a problem at the moment.”
