The U.S. trade deficit plummeted in February to its lowest level in five years as the West Coast labor disputes contributed to depressed imports and exports, and a stronger dollar hindered the global competitiveness of domestic goods.

The deficit narrowed by $7.2 billion to $35.4 billion, a 17% decrease from January’s revised $42.7 billion. February’s deficit is the smallest since October 2009, and comes in even lower than both the projected median estimate of $41.2 billion and the lowest projection of $38.0 billion by 60 economists surveyed by Bloomberg.

Exports overall shrank 1.6%, its lowest level since October 2012 and imports shrank 4.4%, the lowest since 2009. Exports to Canada and Mexico – the U.S. main trade partners – also dropped.

“We’re looking at a drop in the deficit,” said Mike Englund, the chief economist at Action Economics. “The end of the labor dispute on February 21st provided about a third of the month for imports and exports to play catch up, so that’s a positive factor for the trade balance.”

February’s import and export lows are a result of the since-resolved West Coast labor disputes. The strikes disrupted activities at the ports and created a huge backlog of goods that include auto parts, causing a drop in production the automobile sector hasn’t seen since 2013.

“We’ve seen a weak production rate of about 11.1 million in vehicle productions,” he said. “We haven’t seen a number this low since 2013.”

Honda was forced to scale back production on their best-selling Accord and Civic last month due to delayed shipments of Japanese auto parts from West Coast ports.

Lee Kim, the owner of a beauty supply store in the Bronx, saw fewer sales of hair extensions this month, which he believes is due to the labor disputes.

“We didn’t get any new inventory for almost two months,” said Kim. “All our hair goes through California. I actually had to ask a friend who was coming from China to bring hair with them so I could sell it.”

Lee’s supplier is located in Shanghai, who plans to deploy three Asia-East Coast trade services by sea to avoid potential issues similar to those that resulted from the port strikes.

U.S. imports are continuing to drop, particularly within the petroleum sector. The drop in imports reflects the push for energy independence as the U.S. continues to try its hand at becoming one of the main global exporters of oil. February saw foreign imports of petroleum drop to its lowest level since September 2004.

“The U.S. importing less crude is definitely a piece of the puzzle,” says Patrick DeHaan, senior petroleum analyst at, a provider of retail fuel pricing information and data.

Crude oil imports declined $2.3 billion and industrial supply imports decreased $4.4 billion, showing the shift in investment from crude to shale oil – most of the country’s industrial supplies are petroleum-related, such as drilling parts and machinery used for crude oil production.

Although oil was a significant factor in January’s deficit numbers, the stronger dollar and a weak global economy are major factors in February’s narrowed deficit. The decline in exports overall shows signs of a global economy that is entering its fourth month of contraction, according to the latest data from Goldman Sachs.

“The dollar is the biggest factor, exports are still fairly soft,” said Jennifer Lee, a senior economist at BMO Capital Markets. “With a stronger U.S. dollar, you’d think imports would be higher.”

February’s deficit accounts for 3% of the country’s GDP, causing a lag on overall economic growth. The continued appreciation of the dollar has reduced the global competitiveness of U.S. goods.

A weak Euro has taken a toll California wine exporters, which export 75% of their products to Europe and Canada. The industry experienced a major decline at the end of last year despite four consecutive years of record-breaking revenue.

“The stronger U.S. dollar and weaker growth overseas will subtract from overall growth,” said Lee.

The unusually narrow deficit will be short lived. As the dollar continues to climb, U.S. exports will continue to remain expensive for global trade partners particularly China, whose Yuan is in danger of depreciating despite the push to gain reserve-currency status from the IMF. The U.S.-China deficit has widened and will continue to do so: exports to China have declined roughly 18%.

March will see a bigger trade gap. With the resolution of the labor disputes, imports from global trade partners will increase and the auto industry will see better numbers for the month. Cheaper oil prices will push consumers to purchase new vehicles in time for summer, travel more often, and ultimately spend more money with the uptick in weather.

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