Nation’s trade gap is highest since ‘08
WASHINGTON — The U.S. trade deficit rose 17.7% last year to $679 billion, the highest since 2008, as the coronavirus disrupted global commerce and confounded then-President Donald Trump’s attempts to rebalance America’s trade with the rest of the world.
The gap between the value of the goods and services the United States sells abroad and what it buys climbed from $577 billion in 2019, the Commerce Department said Friday. Exports skidded 15.7% to $2.1 trillion, and imports fell 9.5% to $2.8 trillion.
For December, the trade deficit dropped to $66.6 billion, down 3.5% from November. Exports rose 3.4%, and imports increased 1.5%.
Trump sought to narrow the gap by imposing taxes on imported goods on a scale unseen since the trade wars of the 1930s. The deficit narrowed slightly in 2019 but then ballooned last year as coronavirus restrictions hammered U.S. exports of services such as tourism and education. Services exports dropped 20.4% last year.
Still, the U.S. ran a $237 billion surplus in services last year, the smallest since 2012. But that was overwhelmed by a $916 billion deficit in trade in goods such as aircraft and auto parts. That figure was the highest since records started in 1961.
The politically sensitive deficit with China in the sale of goods fell 10% last year to $311 billion; Trump had imposed tariffs on $360 billion worth of Chinese imports to protest Beijing’s efforts to supplant Western dominance in technology, an effort that the U.S. alleged included cybertheft.
China regained the top spot among U.S. trade partners for goods after finishing behind Mexico and Canada in 2019. Beijing and the U.S. a year ago signed the first phase of a trade agreement that’s supposed to see China buying an ex
tra $200 billion of American goods in two years, the result of nearly three years of contentious talks that roiled markets.
President Joe Biden’s administration is setting up its trade policy to prioritize enforcement of existing commitments by the U.S.’s partners over negotiating more deals to open new export markets. Biden has signaled he won’t immediately remove duties inherited from Trump.
Biden’s likely strategy for supporting American producers focuses on going after violations via dialogue, working with allies and using dispute-resolution mechanisms in existing trade agreements rather than following the Trump administration’s more blunt unilateral tool of national-security tariffs, according to industry veterans familiar with his team. That could leave free-trade talks with the United Kingdom and Kenya in limbo for the foreseeable future.
Biden’s starting point may be the U.S.-Mexico-Canada Agreement that took effect in July, replacing the North American Free Trade Agreement. Katherine Tai, Biden’s nominee for U.S. trade representative, was instrumental in negotiating the deal’s labor provisions. The AFL-CIO, the U.S.’s largest labor union and a traditional Democratic ally, has been promising since September to bring the first complaint over conditions in Mexico.
“We should expect action under the labor provisions … pretty quickly,” said Jamieson Greer, a partner in the international trade practice at King & Spalding in Washington who served as chief of staff to Trump’s trade representative, Robert Lighthizer. The new administration “is going to want to bring a case that’s really targeted to a specific facility in Mexico that’s as close to a slam-dunk case as you can get.”