2021 US Trade Deficit Grew To Largest On Record

Frank Balm Feb 9, 22

EDITOR'S NOTE: Remember the US-China trade war and the agreement that somewhat relaxed it toward the end of 2019? Well, as you know, the pandemic unexpectedly followed, and despite the tariffs still in place, America ended relying on Chinese-imported goods. This reliance intensified to such a degree that America’s trade deficit last year notched a new record high. During the 2020 lockdown, demand for US exports paled in comparison to America’s consumption needs. This shouldn’t come as a surprise. As the world’s reserve currency provider, the US has been running a trade deficit since the end of WWII. The current deficit, however, takes the cake.

(Bloomberg) -- The U.S. trade deficit grew in 2021 to the largest on record, reflecting a surge in the value of consumer-goods imports as the pandemic discouraged spending on services and drove more outlays for merchandise.

The annual shortfall in goods and services increased for a second straight year, widening 26.9% to $859.1 billion, Commerce Department data showed Tuesday. The December gap grew to $80.7 billion from the prior month. That compares with the median estimate of $83 billion in a Bloomberg survey of economists. The figures aren’t adjusted for prices.

Annual imports climbed 20.5% to $3.39 trillion from 2020, while exports rose 18.5% to $2.53 trillion.

The data bear the effects of the second year of the pandemic in the world’s largest economy -- elevated savings spurred by government stimulus and a stronger dollar saw homebound Americans purchase more goods and invest in their homes. The result sparked a surge in inbound shipments that strained ports and logistics, and depleted inventories.

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Source: MSN via Bloomberg

In the fourth quarter, businesses pushed to replenish lean stocks, supporting an acceleration in the pace of economic growth.

Many of the imports came from China, despite the billions of dollars of tariffs the U.S. imposed on shipments ranging from footwear and clothing to electronics and bicycles and even pet food. The annual goods-trade deficit with China grew $45 billion to $355.3 billion, the data showed. Meanwhile, Beijing as fallen short on its purchase commitments under a trade agreement reached during the Trump administration in early 2020.

Digging Deeper

In December, the value of imports increased to a record $308.9 billion, while exports grew to $228.1 billion. The merchandise-trade deficit widened to $101.4 billion, a record, The nation’s surplus in services trade rose to $20.7 billion, the highest since MayTravel exports -- or spending by visitors to the U.S. -- climbed for a fourth month to a pandemic-high of $8.6 billion. Travel imports, a measure of Americans traveling abroad dropped to $6.5 billion. On an inflation-adjusted basis, the December merchandise-trade deficit widened to $111.2 billion from $109.9 billion a month earlier.