- Jonathan Ernst/Reuters
- The US trade deficit in goods and services hit $621 billion in 2018, an increase of $69 billion from the year before.
- The increase was driven by a $218 billion increase in imports and a smaller $149 billion increase in exports.
- President Donald Trump has made reducing the trade deficit a key goal of the trade war, despite most economists arguing that the measure does not accurately reflect the US’s economic competitiveness.
The US trade deficit in goods and services increased to $621 billion in 2018, an increase of $69 billion from the year prior and the largest deficit since 2008.
But despite the president’s tariffs on steel, aluminum, and Chinese goods, strong US demand for imports and a strong dollar drove the deficit up to its highest level since 2008.
According to the Census Bureau, US imports increased by $218 billion in 2018, to $3.12 trillion, while exports grew by just $149 billion, to $2.5 trillion.
Looking just at goods – a figure Trump also focuses on – the trade deficit increased by $83.8 billion, to $891 billion, a 10.4% jump from 2017. By contrast, the US actually maintained a $270 billion surplus in the trade of services, up $15 billion, or 5.9%, from 2017.
The deficit with the main target of Trump’s trade war, China, also grew substantially in 2018. The goods trade deficit with China hit $419 billion last year, an increase of $44 billion, according to Census Bureau data. Imports increased by $34 billion, to $540 billion, while exports dropped $10 billion, to $120 billion.
While Trump’s goal for the trade war was to reduce the trade deficit, particularly in goods, Trump’s tariffs may actually be helping to drive the deficit increase.
US companies rushed to bring in goods that were about to be subject to Trump’s tariffs, driving up imports, while at the same time retaliatory tariffs by countries like China and Mexico led to a significant decrease in some major US exports. Even if China agrees to buy more US goods under a new trade deal, some businesses that changed their supply chains because of the trade war may not go back to buying US goods.
In total, the trade deficit has increased by $119 billion in the two years since Trump took office after coming in at $502 billion in 2016.