The annual trade deficit has fallen. Yet for 2023, our trade deficit of $773 billion was once again the world’s largest. Our goods deficit, at $1.06 trillion, exceeded a trillion dollars for the third year in a row.
Goods imports fell by $160 billion in 2023. Perhaps corporate spending on imported goods to fill shelves and warehouses has not kept up with consumer spending, which remains robust. The recession never happened. As a result, the U.S. goods deficit for December was $89.07 billion (up from Nov., down from Oct.)
China Down, But By How Much, Really?
Perhaps the biggest takeaway was the ongoing decline of U.S.-China trade, as measured by the deficit. The year-ending deficit for 2023 with China was $279.42 billion. That’s the lowest deficit since 2010 when the U.S. reported a $273.04 billion deficit, a record breaker at that time.
The U.S. imported $427 billion worth of goods from China in 2023; again the lowest number since 2012. In 2022, the U.S. imported $536.3 billion worth of goods, an all-time record. Pre-pandemic, in 2019, the U.S. imported $449.11 billion, so the import values are not that staggeringly different from four years ago.
Exports to China of $147.8 billion were their third highest on record; a record which got smashed in the Covid years, topping off at $154.01 billion in 2022. In 2021, the U.S. exported $151.43 billion worth of goods to China.
“Our imports from China dropped dramatically, by $109 billion or 20 percent between 2022 and 2023, while our exports remained almost the same,” said CPA chief economist Jeff Ferry. “This is due to a couple of trends. First, the return to normality after Covid disruption. After the inability to get goods in 2020 and 2021, companies over-ordered in 2022 but orders, shipments, and sales returned to something close to normal in 2023. But more fundamentally, the U.S. is decoupling from China. Billions of dollars of production is moving to India, Southeast Asia, and Mexico as global corporations recognize that the U.S. does not want to buy Chinese any more. Of course there is a large Chinese component in our imports from those places, as China tries desperately to raise its exports in its troubled economy, but the decoupling trend is real and an important harbinger of what is to come in the next ten years.”
It has been known for sometime now that China has used Vietnam as an offshore haven to ship goods to the United States. While some of these goods were transshipped, or merely assembled in Vietnam, many Chinese companies have set up shop there to service Western economies. This is especially true for solar companies. Chinese solar companies have made tens of millions of dollars of investments in greenfield projects and expanded on existing ones to sell solar goods to the West.
Like China, the deficit with Vietnam declined year over year from $116.12 billion in 2022 to $104.62 billion in 2023. (The December goods gap was $8.7 billion.)
Imports from Vietnam are still trending way higher than historical averages. The U.S. imported $114.43 billion in 2023, down from the 2022 record of $127.48 billion, but double 2019, based on Census numbers.
Mexico and EU Trade Rises Again
The U.S. goods deficit with Mexico rose by around $30 billion to $152.37 billion, a record. For perspective, in 2018, the year tariffs were imposed on China, the goods deficit with Mexico was $77 billion, according to Census. Mexico exports to the U.S. ($475.60 billion) beat China exports to the U.S. ($427.22 billion, or $431 billion when including Hong Kong) for the first time.
Canada may also be a beneficiary of a post-China realignment, if you will. The deficit was $67.86 billion in 2023, more than three times where it was in 2018.
The U.S. deficit with EU member states rose by around $5.3 billion to $208.22 billion. Like the overall trade deficit, last year failed to break the record $218.30 billion set in 2021, but came in second place, regardless.
The U.S. is selling more goods to the European Union. Exports broke a record, coming in at $368.75 billion, beating the 2022 record of $350.79 billion. But imports were also a record smasher at $576.98 billion, around $20 billion more than the previous year’s record. Top imported goods from Europe include automobiles, auto parts and pharmaceuticals.
The Top Most Traded Items and the Deficit
Once again, many of the manufactured goods – whether from a factory floor or in a lab – that the U.S. considers its top exports are also its top imports.
Here are five of the top traded items and their deficit for 2023. The list pulls from the top exported manufactured goods and compares it to imports. The U.S. remains a commodity exporter, with fossil fuels exports, and soybeans topping the leaderboard.
Product
2023 Full Year Exports
Full Year Imports
2023 Deficit
Pharmaceuticals
$101.96 billion
$203.43 billion
$101.47 billion
Industrial machinery
$68.84 billion
$76.20 billion
$7.36 billion
Auto parts
$62.83 billion
$141.07 billion
$78.24 billion
Automobiles
$61.46 billion
$203.58 billion
$142.12 billion
Semiconductors
$57.05 billion
$72.48 billion
$15.43 billion
These numbers, one can assess that the U.S. auto industry is increasingly reliant on Mexico. Also, the U.S. does not meet its domestic needs for pharmaceuticals as imports have long been known to constitute 80 percent or more of the generic drugs sold in the United States.
The U.S. imported more pharmaceuticals in 2023 than it did in 2022 ($202.43 billion vs. $189.79 billion).
Aircraft engines are one of the manufactured goods where the U.S. enjoys a surplus. The U.S. exported $53.83 billion worth of engines and imported $25.68 billion.
Always interesting to consider in the trade figures is the American food supply. The U.S. is increasingly a net importer of food. The U.S. imported over $200 billion worth of food, ranging from seafood to beef, and exported $162.4 billion.
“The 2023 data confirm that the U.S. has once again posted the world’s largest trade deficit, and of course China’s own data shows it boasts the world’s largest trade surplus, “ said Ferry. It is hard if not impossible to see how we can generate significant economic growth in this country while the trade deficit continues at close to a trillion dollars, or 3 percent of GDP.”
MADE IN AMERICA.
CPA is the leading national, bipartisan organization exclusively representing domestic producers and workers across many industries and sectors of the U.S. economy.
Annual Goods Trade Deficit Has Fallen, But Still Beats $1 Trillion. China Deficit Shrinks By Billions.
The annual trade deficit has fallen. Yet for 2023, our trade deficit of $773 billion was once again the world’s largest. Our goods deficit, at $1.06 trillion, exceeded a trillion dollars for the third year in a row.
Goods imports fell by $160 billion in 2023. Perhaps corporate spending on imported goods to fill shelves and warehouses has not kept up with consumer spending, which remains robust. The recession never happened. As a result, the U.S. goods deficit for December was $89.07 billion (up from Nov., down from Oct.)
China Down, But By How Much, Really?
Perhaps the biggest takeaway was the ongoing decline of U.S.-China trade, as measured by the deficit. The year-ending deficit for 2023 with China was $279.42 billion. That’s the lowest deficit since 2010 when the U.S. reported a $273.04 billion deficit, a record breaker at that time.
Exports to China of $147.8 billion were their third highest on record; a record which got smashed in the Covid years, topping off at $154.01 billion in 2022. In 2021, the U.S. exported $151.43 billion worth of goods to China.
“Our imports from China dropped dramatically, by $109 billion or 20 percent between 2022 and 2023, while our exports remained almost the same,” said CPA chief economist Jeff Ferry. “This is due to a couple of trends. First, the return to normality after Covid disruption. After the inability to get goods in 2020 and 2021, companies over-ordered in 2022 but orders, shipments, and sales returned to something close to normal in 2023. But more fundamentally, the U.S. is decoupling from China. Billions of dollars of production is moving to India, Southeast Asia, and Mexico as global corporations recognize that the U.S. does not want to buy Chinese any more. Of course there is a large Chinese component in our imports from those places, as China tries desperately to raise its exports in its troubled economy, but the decoupling trend is real and an important harbinger of what is to come in the next ten years.”
It has been known for sometime now that China has used Vietnam as an offshore haven to ship goods to the United States. While some of these goods were transshipped, or merely assembled in Vietnam, many Chinese companies have set up shop there to service Western economies. This is especially true for solar companies. Chinese solar companies have made tens of millions of dollars of investments in greenfield projects and expanded on existing ones to sell solar goods to the West.
Like China, the deficit with Vietnam declined year over year from $116.12 billion in 2022 to $104.62 billion in 2023. (The December goods gap was $8.7 billion.)
Imports from Vietnam are still trending way higher than historical averages. The U.S. imported $114.43 billion in 2023, down from the 2022 record of $127.48 billion, but double 2019, based on Census numbers.
Mexico and EU Trade Rises Again
The U.S. goods deficit with Mexico rose by around $30 billion to $152.37 billion, a record. For perspective, in 2018, the year tariffs were imposed on China, the goods deficit with Mexico was $77 billion, according to Census. Mexico exports to the U.S. ($475.60 billion) beat China exports to the U.S. ($427.22 billion, or $431 billion when including Hong Kong) for the first time.
Canada may also be a beneficiary of a post-China realignment, if you will. The deficit was $67.86 billion in 2023, more than three times where it was in 2018.
The U.S. deficit with EU member states rose by around $5.3 billion to $208.22 billion. Like the overall trade deficit, last year failed to break the record $218.30 billion set in 2021, but came in second place, regardless.
The U.S. is selling more goods to the European Union. Exports broke a record, coming in at $368.75 billion, beating the 2022 record of $350.79 billion. But imports were also a record smasher at $576.98 billion, around $20 billion more than the previous year’s record. Top imported goods from Europe include automobiles, auto parts and pharmaceuticals.
The Top Most Traded Items and the Deficit
Once again, many of the manufactured goods – whether from a factory floor or in a lab – that the U.S. considers its top exports are also its top imports.
Here are five of the top traded items and their deficit for 2023. The list pulls from the top exported manufactured goods and compares it to imports. The U.S. remains a commodity exporter, with fossil fuels exports, and soybeans topping the leaderboard.
Product
2023 Full Year Exports
Full Year Imports
2023 Deficit
Pharmaceuticals
$101.96 billion
$203.43 billion
$101.47 billion
Industrial machinery
$68.84 billion
$76.20 billion
$7.36 billion
Auto parts
$62.83 billion
$141.07 billion
$78.24 billion
Automobiles
$61.46 billion
$203.58 billion
$142.12 billion
Semiconductors
$57.05 billion
$72.48 billion
$15.43 billion
These numbers, one can assess that the U.S. auto industry is increasingly reliant on Mexico. Also, the U.S. does not meet its domestic needs for pharmaceuticals as imports have long been known to constitute 80 percent or more of the generic drugs sold in the United States.
The U.S. imported more pharmaceuticals in 2023 than it did in 2022 ($202.43 billion vs. $189.79 billion).
Aircraft engines are one of the manufactured goods where the U.S. enjoys a surplus. The U.S. exported $53.83 billion worth of engines and imported $25.68 billion.
Always interesting to consider in the trade figures is the American food supply. The U.S. is increasingly a net importer of food. The U.S. imported over $200 billion worth of food, ranging from seafood to beef, and exported $162.4 billion.
“The 2023 data confirm that the U.S. has once again posted the world’s largest trade deficit, and of course China’s own data shows it boasts the world’s largest trade surplus, “ said Ferry. It is hard if not impossible to see how we can generate significant economic growth in this country while the trade deficit continues at close to a trillion dollars, or 3 percent of GDP.”
MADE IN AMERICA.
CPA is the leading national, bipartisan organization exclusively representing domestic producers and workers across many industries and sectors of the U.S. economy.
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