The US still exports a lot of stuff — record amounts. But it drowns under a tsunami of imports. And the services surplus fizzled.
By Wolf Richter for WOLF STREET.
The US trade deficit in goods and services in 2021 exploded by 27% from 2020, to $859 billion, according to data by the Commerce Department. This is the result of 30 years of rampant and government-policy-encouraged globalization by Corporate America, from Walmart, Amazon, and the vast auto industry to the pharmaceutical industry.
The trade deficit is a negative for GDP, and a negative for the overall economy in America, and it contributes substantially to the current supply-chain chaos. But US trade deficits are a huge positive for China, Germany, Vietnam, Mexico, and many other countries that we’ll get to in a moment. The driver behind the trade deficit is Corporate America.
And inflation, if the US trade with the rest of the world were balanced, would roughly cancel out in trade with higher prices both on exports and imports. But this trade is stunningly unbalanced.
Services trade surplus fizzles. Trade deficit in goods blows out.
The US services trade surplus in 2021 dropped by 5.6% to a measly $231 billion, the lowest services surplus since 2012, and the third year in a row of declines. Imports of services soared by 16% to $535 billion. Exports of services – which include spending by foreign tourists and students in the US – rose by 8.6% to $767 billion.
The trade deficit in goods worsened by 18% in 2021, to a blistering $1.09 trillion, by far the biggest and worst ever.
Exports of goods (green) rose by 23%, to a record by a slim margin of $1.76 trillion, driven by massively higher prices for prime US exports products, including petroleum, petroleum products, natural gas, and the products of the petrochemical industry.
Imports of goods worsened by 21% to a stunning record worst of $2.85 trillion, driven by higher prices and a flood of imports.
But the US still exports a lot of stuff — record amounts of stuff.
Exports of Capital Goods, including motor vehicles and automotive products, rose by 12.7% in 2021, to $663 billion, accounting for 38% of total US exports. Here are the largest categories:
|Exports of capital goods, incl. automotive||2021
|Industrial machines, other||68.4||57.3||19.4%|
|Passenger cars, new and used||53.7||45.2||18.7%|
|Other parts and accessories of vehicles||47.4||44.9||5.6%|
|Measuring, testing, control instruments||24.1||22.3||7.8%|
|Trucks, buses, and special purpose vehicles||20.9||17.5||19.4%|
Exports of Industrial supplies and materials jumped by 36% to $636 billion, accounting for 36% of total exports of goods.
The largest categories in this group are crude oil, petroleum products, natural gas, petrochemical products, and coal, whose combined exports soared by 52%, to a record $294 billion in 2021, largely driven by huge price increases. These exports accounted for 17% of total goods exports:
|Exports of fuels & petrochemicals, major categories||2021
|Petroleum products, other||63.9||38.7||65.1%|
|Natural gas liquids||30.8||16.1||91.6%|
|Coal & other fuels||7.3||5.4||35.7%|
This group of industrial supplies and materials also includes precious metals. The US exported $55.8 billion of gold and other precious metals in 2021, up 36% from a year ago:
|Exports of gold & precious metals||2021
|Precious metals, other||24.9||17.7||40.6%|
|Total precious metals||55.8||41.0||36.2%|
Exports of consumer Goods jumped by 27% to $222 billion, accounting for 12.6% of total exports. The largest category of consumer goods are pharmaceutical products, $83 billion.
|Cell phones and other household goods, n.e.c.||30.2||24.2||24.5%|
|Toiletries and cosmetics||13.2||12.5||6.1%|
|Toys, games, and sporting goods||10.9||8.2||33.4%|
|Artwork, antiques, stamps, etc.||8.7||8.2||5.9%|
|Apparel, household goods – textile||7.4||6.1||21.0%|
Exports of food, feeds, and beverages jumped by 18.6% in 2021 to $165.2 billion, accounting for 9.4% of total exports.
|Foods, feeds, and beverages||2021
|Meat, poultry, etc.||25.1||20.5||22.7%|
|Animal feeds, n.e.c.||11.0||9.3||18.0%|
|Fruits, frozen juices||8.7||8.1||7.0%|
|Dairy products and eggs||6.6||5.4||20.5%|
The Goods Trade Deficit, by Country.
Below are the 13 countries with which the US has the largest trade deficits in goods. The opaque nature of international trade, such as trans-shipments through third countries, trade invoicing via third countries, tax dodging, etc., can produce peculiar results, such as Switzerland and Ireland, as you can see below. Vietnam has become a major transshipment center for the China trade to dodge US tariffs.
The Goods Trade Deficit with China & Hong Kong.
Imports of goods from China and Hong Kong combined jumped 15% in 2021 to $510 billion, after two years of declines (red columns below).
Exports of goods to China and Hong Kong rose by 22% to $181 billion, with not much improvement since 2013 (green columns).
The goods trade deficit with China and Hong Kong worsened by 12% to $329 billion, after two years of improvements with 2020 having been the least terrible deficit year since 2013 (purple line):
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