Dominance of Manufactured Goods in the U.S. Trade Deficit

In the 1950s and 1960s, the U.S. held the position of the world's leading exporter. However, starting in the 1970s, the United States began to experience trade deficits, a trend that persists to the present day.

 

Between 1990 and 2000, the U.S. trade deficit surged by 290%, outpacing the growth of exports. During this period, its share of GDP rose from 2.1% to 4.7%. The growth rate of the trade deficit closely mirrored that of exports, with the average share of GDP reaching 4.9% from 2000 to 2021.

 

The increase in oil prices from 1999 to 2008 led to a rise in the U.S. trade deficit in fuels and related products, soaring from $80 billion to $500 billion. This sector's share of the total trade deficit escalated from 19% to 48%. However, since 2015, the trade deficit in fuels and related products has decreased, turning positive since 2020.

 

Since 2015, manufactured goods have been the primary source of the U.S. trade deficit. Economic classification reveals that in 2021, the U.S. trade deficit in manufactured goods was divided into capital goods (34%), consumption goods (33%), transport equipment (20%), and industrial supplies (10%). Mechanical and electrical machinery, as well as transport equipment, collectively accounted for about half of the total U.S. trade deficit in 2021.

 

China's accession to the WTO in 2001 marked a significant turning point. In that year, the U.S. trade deficit with China was $84 billion. From 2001 to 2018, China contributed to 40% of the growth in imports and 59% of the increase in the U.S. manufacturing trade deficit. The U.S.-China trade war, which began in 2019, has led to a reduction in the U.S. manufacturing trade deficit with China.

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