As a candidate, Donald Trump promised “brilliant trade” policies that would drop the national trade deficit “like you’ve never seen before.”
WASHINGTON (Reuters) – The United States’ trade deficit surged to its highest level in 12 years in 2020 as the COVID-19 pandemic disrupted the flow of goods and services.
The Commerce Department said on Friday that the trade deficit jumped 17.7% to $678.7 billion last year, the highest since 2008. Exports of goods and services tumbled 15.7% to their lowest level since 2010. Imports of goods and services dropped 9.5% to a four-year low.
The plunge in exports contributed to the economy shrinking 3.5% last year, the biggest drop in gross domestic product since 1946. Trade flows have been gradually improving. For December, the trade deficit narrowed 3.5% to $66.6 billion .
America’s trade gap soared under Trump, final figures show
The combined U.S. goods and services trade deficit increased to $679 billion in 2020, compared to $481 billion in 2016, the year before Trump took office. The trade deficit in goods alone hit $916 billion, a record high and an increase of about 21 percent from 2016.
“The Trump administration never had a feasible plan for reducing the trade deficit,” explained Mary Lovely, a senior fellow at the Peterson Institute for International Economics. “Their 2017 tax cut ensured that the U.S. as a whole would continue to spend more than it produced, hence the need for a current account deficit. The tariffs on China reduced imports from China, but these were mostly replaced with imports from other sources.”