According to the Department of the Census, in 2018 the U.S. trade deficit, which measures what the country exports versus imports, ballooned to $621 billion, meaning that the U.S. imported $621 billion more than it exported. Last year, we exported $2.5 trillion, while importing $3.1 trillion of goods and services. This is the largest trade deficit since this figure hit $708.7 billion in 2008. The U.S. has run a trade deficit since 1975.
One of President Donald Trump’s most passionate objectives is to reduce the trade deficit, and his preferred method to do this has been by imposing tariffs on trading partners he perceives to be responsible for the majority of the deficit. Thus, he has imposed billions of dollars of tariffs on a wide variety of Chinese imports, and Mexican and Canadian imported steel and aluminum. In spite of the tariffs, the trade deficit continues to grow. So, what is occurring that keeps pushing this indicator to new heights?
First, let’s look at the countries with which the U.S. runs the highest trade deficits. With China, the U.S. traded $660 billion in 2018 with the result of a $419 billion deficit – by far accounting for the largest component of the overall trade deficit. Approximately 18 percent of China’s total exports are destined for the U.S. These include consumer products, medical equipment, textiles, industrial products and raw materials such as steel.