But the Trade Fiasco with China was the least terrible since 2013.
By Wolf Richter for WOLF STREET.
The US trade deficit in goods worsened by 6% in 2020, to $916 billion, the biggest and worst ever. Exports of goods plunged by 13.2% to $1.43 trillion, the worst since 2010. Imports of goods during the year fell by 6.6% to $2.35 trillion.
Half of the decline of imports was driven by an $80 billion or 38% plunge in imports of petroleum and petroleum products, to $127 billion, the lowest since 2002, caused by the collapse in crude oil prices, the collapse in demand, and US production from fracking. Combined with US exports of petroleum and petroleum products, it produced the first annual US petroleum trade surplus ($18 billion) on record, according to data by the Commerce Department.
US exports to the rest of the world add to GDP, and US imports are a negative for GDP. Every country wants to export itself out of trouble. And the US has been eager to make this possible for other countries – driven largely by Corporate America’s three-decade binge to globalize its supply chains to fatten up its profit margins.
The US services trade surplus in 2020 plunged by 17.5% to $237 billion, the lowest services surplus since 2012. Imports of services plunged by 21.8% to $460 billion; and exports of services – which include spending by foreign tourists and students in the US – plunged by 20.4% to $697 billion. This was the second year in a row of declining services surplus.
The total trade deficit of goods and services worsened by 17.7% to $679 billion, the worst since 2008. The chart below shows the total trade deficit in goods and services (red columns), the trade deficit in goods (black line) and the trade surplus in services (green line):
The Goods Trade Deficit, by Country.
Below are the 14 countries plus the European Union (yellow bar) with which the US has the largest trade deficits in goods. The opaque nature of international trade transactions, such as trans-shipments, trade invoicing via third countries, tax dodging, etc., can produce peculiar results, particularly with small countries such as Switzerland and Ireland, as you can see below. Compared to 2019, the trade deficit:
- With China & Hong Kong fell by 7.8% to $295 billion (more on that in a moment).
- With Mexico rose by 10.8%.
- With Germany fell by 14.9%.
- With Japan fell by 20%, which put it below the trade deficits with Ireland and Switzerland for the first time.
- With Ireland rose by 5.7%.
- With Switzerland jumped by 111%, which put the tiny country on par with Germany.
- With Canada fell 44% to just $15 billion, with large volumes imports and exports nearly in balance.
Imports and Exports of Goods, by Country.
The chart below shows US imports from (red) and exports to (black) the major trading partners, plus the EU, in order of the magnitude of imports. The trade relationship with China is the most out of whack; the trade relationship with Canada is the most in…
Go to the news source: US Trade Deficit in 2020 Worst since 2008, Goods Deficit Worst Ever Despite Firs…
