The U.S. economy grew 5.7% in 2021, the fastest pace since 1984, bouncing back from the 2020 recession. That’s great news for America, but what happened to the country’s trade balance?
America’s trade deficit of goods shot up to a whopping record $1.1 trillion in 2021 from $922 billion in 2020, leading to its largest-ever deficit. Imports dwarfed exports, reaching new highs of $2.9 trillion in 2021. U.S. exports to other countries accounted for $1.8 trillion.
Using the latest data on international trade from the U.S. Census Bureau, we’ve visualized the flow of America’s annual imports and exports for selected countries. The difference between the two measures is the country’s trade deficit.
Who Are the U.S. Largest Trading Partners?
In 2021, U.S trade of goods amounted to nearly $4.6 trillion and Canada, Mexico, and China were America’s biggest trading partners. Those three countries alone combined for a total trade of $1.9 trillion. Unsurprisingly, America’s two biggest trading partners are its neighboring countries, Canada, and Mexico.
Let’s take a look at the 10 countries that trade the most with the U.S.
| U.S. Trade Partners | Imports (in billion U.S. dollars) |
Exports (in billion U.S. dollars) |
Total Trade (in billion U.S. dollars) |
|---|---|---|---|
| Canada | $357.2 | $307.6 | $664.8 |
| Mexico | $384.7 | $276.5 | $661.2 |
| China | $506.4 | $151.1 | $657.5 |
| Japan | $135.1 | $75.0 | $210.1 |
| Germany | $135.2 | $65.2 | $200.4 |
| South Korea | $95 | $65.8 | $160.8 |
| United Kingdom | $56.4 | $61.5 | $117.9 |
| Taiwan | $77.1 | $36.9 | $114 |
| India | $73.3 | $40.1 | $113.4 |
| Vietnam | $101.9 | $10.9 | $112.8 |
However, if we take a look at the top 10 countries trading with the U.S, we can see that U.S. trade still relies a lot on Asia since six out of the top 10 countries are Asian countries.
Which Countries Does the U.S. Have the Largest Trade Deficit With?
The largest trade deficit is undoubtedly with China, which accounts for more than 35% of the U.S. trade deficit in goods. The $355 billion deficit with China comes from importing $506 billion in goods such as machinery, furniture, and bedding. Interestingly, many of those imports are made by American companies who outsource their production to China, shipping raw materials to be assembled for a lower cost. These outsourcing activities are counted as imports even though they create profit for these U.S. companies.
Below are the top 10 trading partners that the U.S. has the largest trade deficit with.
| U.S. Trade Partners | Trade Deficit (in billion U.S. dollars) |
|---|---|
| China | $355.3 |
| Mexico | $108.2 |
| Vietnam | $91 |
| Germany | $70.1 |
| Japan | $60.2 |
| Ireland | $60.2 |
| Canada | $49.5 |
| Malaysia | $41 |
| Taiwan | $40.2 |
| Italy | $39.3 |
The second largest U.S. trade deficit is with Mexico with $108 billion. The main imports from Mexico are cars, trucks, and auto parts. On the other side, the main exports are auto parts and petroleum products.
How Does a Trade Deficit Hurt the U.S. Economy?
The U.S. has been running trade deficits since the late 1970s, so these latest numbers are a continuation of a long term trend. Are these trade deficits a bad thing? The simple, unsatisfying answer is, it depends.
When any country spends more money on imports than it makes on exports, it must somehow make up the shortfall. Typically, this means takes the form of borrowing from foreign lenders or allowing foreign investment in domestic assets. In the U.S., the trade imbalance with China is a sore point, as millions of jobs in manufacturing have been lost due to offshoring in recent decades.
That said, running a trade surplus is no guarantee of strong economic performance. Germany is a prime example of a country with a massive trade surplus, but modest economic growth in recent years.
The post Visualizing the Largest Trading Partners of the U.S. appeared first on Visual Capitalist.