The U.S. trade deficit shrunk in 2019 as President Trump’s trade wars caused both exports and imports to fall. Imports fell sharply as tariffs made them less attractive while exports of U.S. goods declined moderately.
The Department of Commerce reported Wednesday that the goods and services deficit for the previous year was $617 billion, down from $628 billion in 2018. Imports came in at $3.1 trillion, down $12.5 billion, while exports were at $2.5 trillion, down $1.5 billion.
The trade deficit with China was $346 billion in 2019, down $74 billion. Imports decreased by $87 billion while exports fell $14 billion.
Exports of goods took the hardest hit, falling $21 billion overall, with the largest declines hitting aircraft sales by $13 billion and oil products by $8 billion. Goods imports dropped $43 billion overall, with industrial supplies falling $54 billion, crude oil dropping $30 billion, and computers and telecommunications equipment declining $12 billion each.
Wednesday’s report on international trade follows a year that saw escalating tensions with Beijing boosting tariffs on Chinese goods and, later, renewed tension with the European Union and its members.
Trump has said he wants to shrink the trade deficit. His policies resulted in the United States relying less on imports — but mostly by pricing them out of the range that consumers and businesses could justify. Retaliatory tariffs limited markets abroad for U.S. goods.
Despite the signing of a phase one deal with Beijing, the administration has maintained 7.5% tariffs on $120 billion worth of Chinese goods and 25% tariffs on another $250 billion worth of products.
Beijing has responded with tariffs between 5% to 25% on $185 billion worth of U.S. goods. It has sharply cut back its purchases of U.S. farm goods too. It bought $19.5 billion in 2017 but only $9.1 billion in 2018 and $8.6 billion in 2019. The phase one deal requires that Beijing buy $200 billion in U.S. goods and services over two year, including $40 billion-$50 billion in farm goods, though it is not clear the demand for such volume exists in China.
The Trump administration has placed tariffs on $7.5 billion worth of EU goods as a result of a long-running dispute over EU subsidies for Airbus. The tariffs range from 10% to 25%, but after a World Trade Organization ruling in its favor, the administration may raise the tariffs to as much as 100%. In reaction to France’s plan to enact a tax that would hit U.S. tech companies such as Facebook and Amazon, the administration has threatened tariffs of up to 100% on French products such as wine, cheese, and handbags totaling $2.4 billion in trade.
