US Trade Deficit Skyrockets to All-Time High During Biden's First Year in Office
The U.S. trade deficit of 2021 hit record levels, nearing $1 trillion. This comes despite the Biden administration’s promises to improve the economy and bolster American manufacturing.
The trade deficit jumped 27 percent in 2021 and hit a record $859.1 billion, Market Watch reported.
This is the largest deficit seen since 2006, which previously held the record with $763.53 billion, the Wall Street Journal reported.
A high trade deficit is usually a bad sign for the economy because it indicates that the U.S. is not producing what its people buy and it subtracts from the overall gross domestic product.
Particularly, this deficit highlights how dependent that U.S. has become on other countries, especially China.
Though the hobbled American economy is still recovering from the pandemic, imports surged by $576.5 billion, and exports grew by $394.1 billion, the New York Times reported.
“Demand for foreign goods was so strong that it snarled global supply chains and clogged American ports, in some cases making it difficult for some exporters to get their products out of the country,” the Times reported.
The trade deficit with China, in particular, grew 14.5 percent to $355.3 billion, the Journal reported.
Biden has consistently promised to strengthen American manufacturing, but this trade deficit and the increase in imports shows that the country is very dependent on foreign made products.
“Joe Biden will mobilize the talent, grit and innovation of the American people and the full power of the federal government to bolster American industrial and technological strength and ensure the future is ‘made in all of America’ by all of America’s workers,” Biden’s campaign promised during the 2020 election.
In the summer of 2021 Biden signed an executive order aimed at boosting domestic manufacturing and creating markets for new technology.
“I don’t buy for one second that the vitality of American manufacturing is a thing of the past,” Biden said, Reuters reported.
“American manufacturing was the arsenal of democracy in World War Two, and it must be part of the engine of American prosperity now,” he added.
The American economy did grow throughout 2021. The International Monetary Fund estimated that the economy grew by 5.6 percent, the Journal reported.
But the widening deficit will likely push down overall economic growth in the first quarter of 2022, Andrew Hunter, senior U.S. economist for Capital Economics, told the Journal.
Though the economy was crippled during the pandemic, the government relief given to Americans actually enabled consumers to keep spending. They purchased foreign goods.
“Americans, sheltering at home from the coronavirus and with savings swelled by government relief packages, slashed their spending on travel, restaurants and movies and splurged on furniture, electronics and other goods instead,” the Times reported.
This is highly problematic, and economists are not encouraged by these trends.
Robert E. Scott, the director of trade and manufacturing policy research at the left-leaning Economic Policy Institute, told the Times that this deficit is “devastating.”
He continued, saying it’s also “draining jobs away from the recovery” although the recovery has been strong.
“All that spending that’s falling on imports is creating jobs elsewhere, and not in the U.S.”
This article appeared originally on The Western Journal.