Last year’s trade deficit of the United States hit a record high at around twenty-seven percent to an all-time high of $859.1 billion, highlighting the strength of the country’s economy and its continuous significant dependence on imports from China and other nations. The U.S. Commerce Department said Tuesday that the trade deficit of 2021 in services and goods well exceeded the past record of about $763.53 billion in 2006.
According to the Commerce Department, the US posted its highest full-year trade deficit in 2021. The data signaled continuous strong economic growth and optimistic consumer demand. In 2021, the US imported services & goods worth around $859.1 billion.https://t.co/tunLqcqViW pic.twitter.com/thuUL3ttb7
— Live News Now (@LiveNewsNow6) February 9, 2022
Furthermore, the trade deficit with China increased 14.5 percent for the whole year to almost 355.3 billion, overturning the decline that followed the policies of then-Republican President Donald Trump intended to cut the deficit with tariffs and purchase targets. However, the 2021 trade deficit was still less than the record deficit of 2018 of $418.2 billion that the United States set with China when former president Trump was in office.
According to the statistics by a senior fellow at Peterson Institute for International Economics, Chad Bown, under January 2020 bilateral deal signed with the Trump government, China acquired fifty-seven percent of the American services and goods it pledged to buy over 2020 and 2021. So, the broader deficit with China increases the pressure with the Biden government to respond to the failure of the Chinese administration to meet its promise.
COVID-19 and Foreign Products
Chief economist at Coalition for Prosperous America, Jeff Ferry, said that the Coronavirus pandemic revealed how desperately the U.S. is dependent on foreign products. Today, the country is still reliant on the same suppliers and products coming from China other foreign countries. In addition, the deputy United States trade representative, Sarah Bianchi, said that America is actively engaged with China to tackle bilateral trade issues. Further, she added that it is evident that the Chinese government still has not fulfilled its Phase One commitment.
During a news conference, a Chinese Foreign Ministry spokesperson, Zhao Lijian, said Monday that bilateral trade matters should be settled in the spirit of equal-footed discussion and mutual respect. Moreover, he added that the United States should work with China to encourage the sound and steady development of China-United States trade and economic relations.
The instant surge in the U.S. trade deficit comes as the economy of the country continues to recover sharply from the COVID-19-stimulated recession during 2020. Besides, the International Monetary Fund (IMF) forecasts the United States economy raised by around 5.6 percent in 2021, swift than most countries’ economies, whose average growth rate was about five percent.
United States consumers spent vast investments on imported goods like game machines, computers, and furniture. In addition, heavy demand for capital goods from businesses, higher food items, and energy prices added to American import bills.
Amazon Sales Grew More in 2021 than 2020
Last week, Amazon Inc. said that its sales grew last year than in 2020, a year when several consumers shifted their businesses to online shopping during the Coronavirus pandemic lockdowns. Andy Jassy, the Chief Executive of Amazon, said that employees in the retail department of the company effectively operated in peak mode for around two years.
Senior United States economist at Capital Economics, Andrew Hunter, said that imports and exports increased last December, indicating that worldwide supply-chain issues are lessening. In a Tuesday note, he wrote that trade in both directions seems to improve from relaxing congestion at American ports towards the last year’s end. According to the government trade statistics, in 2020 and 2021, imports from China were around five percent less than totals for 2018 and 2019, the last two years before the COVID-19 pandemic started.
At the same time, imports from other Asian countries boosted substantially during the outbreak. Likewise, imports from Vietnam were up fifty-seven percent in 2020-2021 compared with 2018-2019, driven by furniture and electronics purchases. Malaysia, Taiwan, and Thailand observed double-digit percentage imports increases for those durations. In the same way, the United States saw a rise in imports from Switzerland at around sixty-one percent in 2020-2021 compared with the preceding two years.