Last Annual Trump Trade Deficit 30% Larger Overall Than Obama’s Final Year, But China Deficit Was Down Significantly
According to an analysis by Public Citizen using inflation-controlled data, the 2020 annual $686 billion U.S. goods and services combined trade deficit was more than 30% larger than the $524.8 billion deficit in 2016, before President Donald Trump entered office. Notably, the 2020 U.S. trade deficit with China is 16.9% smaller than during the last year of the Obama administration and down more than 11% in inflation-adjusted terms from 2019 after another year of tariffs on hundreds of billions in Chinese imports. However, imports of goods from other countries grew 15% from $531.8 billion in 2019 to $611.6 billion in 2020.
The large jump in the 2020 overall deficit is notable because the COVID-19 pandemic led to a 12.2% decrease in trade flows overall. The U.S. 2020 goods and services trade deficit is also larger than the 2019 figure by 16.1%.
A fall in global trade volumes is expected to reduce the size of trade imbalances. However, U.S. exports – particularly of services – declined more than imports declined during the COVID economic shock, leading to the widening deficit. Lockdowns and travel restrictions had a dire impact on services such as tourism, transport and education, which are a significant share of U.S. service exports. Yet Americans still had to import many of the basic goods needed to battle the COVID-19 crisis.
Public Citizen’s analysis of the new U.S. Census Bureau trade data also showed:
- The U.S. trade deficit in goods jumped in 2020 from $885.2 billion in 2019 (inflation-adjusted) to $925.8 billion in 2020, a 4.5% increase. The 2020 deficit in goods is up 13.2%, compared to 2016’s pre-Trump figure ($817.8 billion in inflation-adjusted dollars), and it is the largest trade-in-goods deficit since 2008.
- The U.S. trade surplus in services fell from $294 billion in 2019 (inflation-adjusted) to $237 billion in 2020, a 19.4% reduction. Among the sectors that lost the most were tourism and education.
- The China trade-in-goods deficit is down relative to Obama’s final year, but there is a “trade diversion” effect of imports increasing from other countries.
- The 2020 trade-in-goods deficit with China of $314.1 billion is 16.9% smaller compared to 2016, before Trump entered office when it was $378.1 billion in inflation-adjusted dollars. The China deficit is down more than 11% in inflation-adjusted terms from 2019 when it was $353.3 billion.
- In inflation-adjusted dollars, the goods trade deficit with the rest of the world (excluding China) increased from $531.8 billion in 2019 to $611.6 billion in 2020, a more than 15% rise. The deficits with South Korea, Taiwan, Vietnam, and Switzerland grew notably.
- The 2020 deficit in manufactured goods is 4.1% higher than in 2019 and 18% higher than in 2016.
- The trade-in-goods deficit with North American Free Trade Agreement (NAFTA) partners is 22% higher in 2020 relative to 2016 before Trump entered office. However, it is down 6.6% relative to 2019, even as Mexican exports to the United States began to expand significantly starting in June 2020. Adjusting for inflation, the U.S.-Mexico trade-in-goods deficit is $113.8 billion, whereas in 1993, before NAFTA began, the balance reflected a surplus for the United States of $2.9 billion.
- The trade-in-goods deficit with South Korea is 17% lower in 2020 relative to 2016, before Trump entered office. It is up 64% relative to 2011, before the U.S.-Korea Free Trade Agreement went into effect.
*Data Note: Trade data is sourced from the U.S. Census Bureau and the U.S. Bureau of Economic Analysis. We present deficit figures adjusted for inflation to the base month of December 2020 and expressed the data in constant dollars, so the figures represent actual changes in the trade balances.
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