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America’s trade deficit surged in 2022, nearing $1 trillion


WASHINGTON — The overall U.S. trade deficit rose 12.2% last year, nearing $1 trillion as Americans purchased large volumes of foreign machinery, medicines, industrial supplies and car parts, according to data released Tuesday by the Commerce Department.

The goods and services deficit reached $948.1 billion, its largest total on record, after rising $103 billion from the previous year.

The data showed evidence of the U.S. economy’s continuing recovery from the pandemic, which had held down spending on services such as travel and entertainment and pushed up purchases of imported goods. Rapid inflation and higher energy prices were responsible for some of the growth, because the trade data is not adjusted for inflation.

The numbers also showed signs that global supply chains appear to be reshuffling, as the U.S. government erects more barriers to trade with China and businesses seek to diversify where they get materials and goods. The Biden administration has identified the nation’s reliance on China for materials such as solar panels and electric vehicle batteries as a security risk, and introduced incentives and penalties to try to persuade companies to change supply chains that proved vulnerable to pandemic disruptions.

The U.S. trade deficit in goods with Mexico, Canada, India, South Korea, Vietnam and Taiwan all grew strongly last year as manufacturers sought new sources of foreign products.

Still, many companies have so far proved unwilling or unable to cut ties with China, which continues to house the world’s largest concentration of factories. Despite rising tensions between the world’s biggest economies – which were further strained last week by the discovery of a Chinese spy balloon flying over the United States – trade between the countries remains strong.

Overall trade with China last year easily surpassed previous records, and the U.S. trade deficit with China grew 8.3% annually to $382.9 billion, the second highest total on record.

There was also little sign that the United States is retreating from trade with the world overall, even as geopolitical tensions with Russia and China rise.




Published on 2/20/2023 (30 days ago) Energy Crisis