US trade deficit surged in 2022
WASHINGTON — The overall US trade deficit rose 12.2 percent last year, nearing $1 trillion as Americans purchased large volumes of foreign machinery, medicines, industrial supplies, and car parts, according to data released Tuesday by the Commerce Department.
The goods and services deficit reached $948.1 billion, its largest total on record, after rising $103 billion from the previous year.
The data showed evidence of the US economy’s continuing recovery from the pandemic, which had held down spending on services such as travel and entertainment and pushed up purchases of imported goods. Rapid inflation and higher energy prices were responsible for some of the growth, because the trade data is not adjusted for inflation.
The numbers also showed signs that global supply chains appear to be reshuffling, as the US government erects more barriers to trade with China and businesses seek to diversify where they get materials and goods. The Biden administration has identified the nation’s reliance on China for materials such as solar panels and electric vehicle batteries as a security risk and introduced incentives and penalties to try to persuade companies to change supply chains that proved vulnerable to pandemic disruptions.
The US trade deficit in goods with Mexico, Canada, India, South Korea, Vietnam, and Taiwan all grew strongly last year as manufacturers sought new sources of foreign products.
Still, many companies have so far proved unwilling or unable to cut ties with China, which continues to house the world’s largest concentration of factories. Despite rising tensions between the world’s biggest economies — which were further strained last week by the discovery of a Chinese spy balloon flying over the United States — trade between the countries remains strong.
Overall trade with China last year easily surpassed previous records, and the US trade deficit with China grew 8.3 percent annually to $382.9 billion, the second-highest total on record.
Partly as a result of shipments of crude oil, fuel oil, and natural gas to Europe, total US exports grew more quickly than imports last year. A recovery in the US travel and transportation sector after the pandemic also pushed up exports of American services.
The overall volume of US imports remained much larger than exports, however, resulting in a trade deficit. Exports of goods and services rose 17.7 percent to $3 trillion, while imports rose 16.3 percent to $4 trillion. The strong value of the US dollar also made foreign goods cheaper than American ones, driving up the trade deficit.