US annual trade gap grows to biggest since financial crisis

[WASHINGTON] The US last year posted its biggest annual trade deficit since 2008 as the global health crisis depressed export markets for American companies.

The gap in trade of goods and services widened to US$678.7 billion in 2020 from US$576.9 billion in 2019, according to Commerce Department data released Friday. The December deficit narrowed 3.5 per cent from the prior month to US$66.6 billion, but is wider than the US$65.7 billion median estimate of economists.

The pandemic played a pivotal role in spoiling Donald Trump's four-year push to rebalance the deficit, with Covid-19 crimping demand and upending supply chains. The former president slapped hundreds of billions of dollars of tariffs on the European Union and on China, sparking a trade war that hurt US manufacturing and agriculture even as it protected some slices of industry like steelmakers.

China Top China regained the top spot among US trade partners for goods after finishing behind Mexico and Canada in 2019. The Asian nation and the US a year ago signed the first phase of a trade agreement that's supposed to see China buying an extra US$200 billion of American goods in two years, the result of nearly three years of contentious talks that roiled markets.

For the full year, exports plunged 16 per cent, the most in six decades of data, to US$2.13 trillion, the least since 2010. The decline was propelled by a 61 per cent drop in travel, which represents visitors to the US, to US$76.1 billion. Transport exports retreated by more than one-third to US$56.4 billion.

Imports declined 9.5 per cent to US$2.81 trillion, the smallest value in four years.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

The merchandise-trade deficit for 2020 swelled to US$915.8 billion, the most since records started in 1961, while the nation's surplus in services fell 18 per cent to US$237.1 billion, the smallest since 2012.

Overall, the value of US exports plus imports in December rose to US$446.5 billion, the highest since February, but still down from US$469 billion at the end of 2019.

BLOOMBERG