US trade deficit soared to a record last year, underscoring it’s reliance on imports
The U.S. trade deficit soared to record levels in 2021, reaching $859.1 billion. The deficit was at $676.7 billion in 2020, highlighting America’s ongoing reliance on imports made in foreign factories.
The overall trade deficit in both goods and services also hit an annual record, rising 27 percent as the country’s imports far outpaced its exports, according to data released earlier in February by the U.S. Commerce Department.
Americans, sheltering at home from the coronavirus and many with savings swelled by government relief packages, slashed their spending on services and splurged on goods instead.
The trade deficit numbers are also the latest sign of how dependent the United States remains on other countries, particularly China, for the things that consumers want to buy.
While both President Joe Biden and former President Donald Trump have talked about reviving American manufacturing, the U.S. continues to be deeply reliant on factories in China and other low-cost countries to produce a vast array of consumer goods.
Last year’s trade deficit revealed the shortcomings of a trade deal that Trump signed with China in 2020. The agreement was designed to lower the U.S. trade deficit with China, which Trump viewed as a sign of America’s failing trade policy, and to boost purchases of U.S. farm goods before the 2020 election.
China committed to buying an additional $200 billion worth of American goods and services above a 2017 baseline by the end of 2021. But those purchases did not materialize.
The Biden administration has been carrying out negotiations with Chinese officials about the trade deal and said that it intends to hold China to its commitments. But it has not yet clarified what action it will take in response.