U.S. merchandise trade topped $1 trillion in 2021 for the first time, only one year after surpassing $900 billion for the first time.
Actually, I’m speculating.
The U.S. Census Bureau won’t release annual data for another three weeks.
But the total through November was $980 billion, the most recent data. From there, $1 trillion is a chip shot.
My bet is the United States sees a total of about $1.06 trillion, given or take a few billion dollars.
I projected this would happen last summer, in fact.
As I have also written previously, it won’t be a China story. The total this year could well be the third-lowest in the last five years. There are a host of countries, many but not all in Asia, with which the United States will show record deficits when annual numbers are released.
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That deficit also won’t be the only record-setting aspect of U.S. trade for 2021.
As I wrote in a post on Thursday, the United States will also set a record for tariffs collected. Pause for a moment. I would like to think, perpetual optimist that I am, that this would poke a hole in any holdouts’ belief that tariffs can tame the trade deficit.
Imports will set a record as well. How can I be so sure?
Well, the record, set in 2018, was $2.54 trillion. Through November of this year, the total was $2.57 trillion. As was the case with the tariffs collected, the record was broken in 11 months. Expect imports to end up around $2.8 trillion.
And you’re still wondering why all those ships are floating in the Pacific Ocean, trying to squeeze into either the Port of Los Angeles or the Port of Long Beach? Well, we’re buying a lot of stuff. At a time when Covid is keeping people throughout the supply chain from working.
In fact, the deficit would almost certainly be higher but for those stranded ships.
Exports should also break a record, though I keeping my wallet buttoned in my back pocket on that one, just in case. You see, imports are up 12.3% from pre-pandemic 2019 while exports are only up 5.56%. My guess is that exports will end up at about $1.7 trillion, which would best the 2018 total of $1.66 trillion.
Of course, this means overall trade will set a record, topping $4 trillion for the fourth time in the last three years.
With regard to that $1 trillion merchandise trade deficit, it is a pretty remarkable increase, considering that the total only topped $900 billion for the first time last year.
What should be more unsettling to anyone who focuses on trade imbalances would be the actual imbalance.
That is, what about the relationship between exports and imports? Exports divided by total trade as opposed to exports minus imports.
It’s more productive to visualize our trade as a pie, a pie that continues to get larger. It’s better to view is as a pie chart that a bar chart.
Even here, 2021 will be a year that stands out. From 2008 to 2020, the percentage deviated from 40% exports and 60% imports only once — even as the trade deficit fluctuated. That was 2014. The percentage was 41%.
It’s not only an important number. It’s also a slow-moving number.
In 2020, besieged by the pandemic, the number dropped to 38%. When the 2021 data is released in early February, it will have remained at 38%