US trade deficit hit a record in 2021 as China gap widens
- Surging demand from American consumers, reined in during the pandemic shutdowns, helped drive imports from China
- A Trump-era trade deal aimed at closing the trade-in-goods gap fails to reverse the course
The US trade-in-goods deficit with its global trading partners expanded last year to a record US$1.1 trillion, with China accounting for about one-third of that amount despite a long-standing dispute aimed at closing the gap, data from Washington shows.
The past year’s goods-only deficit with China reached US$355.3 billion, lower only than US$418.2 billion in 2018, the US Commerce Department reported on Tuesday. A US $859.1 deficit in overall trade, including goods and services, set another record.
Demand from American consumers, who were reined in during the 2020 pandemic shutdowns, and a restart of production among US manufacturers drove imports from China, analysts say. China makes popular items such as clothing, electronics, medical equipment and auto parts. The US economy grew by an outsized 5.7 per cent in 2021.
01:30
Global supply chain crisis bites in US cities as store shelves empty with rising demand
“The US trade deficit widened significantly in 2021, and the deficit with China contributed to that,” said Charles Seville, co-head of Americas sovereign credit ratings at Fitch. “A wider US trade deficit reflects a surge in US spending on goods.”
The Sino-US trade deficit missed its 2018 peak “partly thanks to recent growth in US exports to China”, Seville said. Exports totalled US$151 billion in 2021, up from US$124.5 billion the year before.