U.S. merchandise trade surpassed $1 trillion in 2021 for the first time, just a year after first surpassing $900 billion.
In fact, I speculate.
The US Census Bureau won’t release annual data for three weeks.
But the total through November was $980 billion, the most recent data. From there, $1 trillion is a chip shot.
My bet is that the United States will see a total of about $1.06 trillion, give or take a few billion dollars.
I predicted this would happen last summer, actually.
As I also wrote previously, this will not be a story from China. This year’s total may well be the third lowest in the past five years. There are a host of countries, many but not all of them in Asia, with which the United States will post record deficits when the annual figures are released.
Nor will that deficit be the only record aspect of U.S. trade for 2021.
As I wrote in an article on Thursday, the United States will also set a record for tariffs collected. Pause for a moment. I would like to think, perpetually optimistic that I am, that this would shake the belief of all holdouts that tariffs can tame the trade deficit.
Imports will also set a record. How can I be so sure?
Well, the record, set in 2018, was $2.54 trillion. Through November of this year, the total was $2.57 trillion. As for the tariffs collected, the record was broken in 11 months. Expect imports to reach around $2.8 trillion.
And you still wonder why all these ships are floating around in the Pacific Ocean, trying to sneak into the Port of Los Angeles or the Port of Long Beach? Well, we buy a lot of things. At a time when Covid is keeping people all along the supply chain from working.
In fact, the deficit would almost certainly be higher without these stranded ships.
Exports are also expected to break a record, although I keep my wallet buttoned up in my back pocket on that one, just in case. You see, imports increased by 12.3% compared to 2019 before the pandemic, while exports only increased by 5.56%. I guess the exports will reach around $1.7 trillion, which would exceed the total of $1.66 trillion in 2018.
Of course, that means global trade will set a record, topping $4 trillion for the fourth time in the last three years.
As for that $1 trillion trade deficit, that’s a pretty remarkable increase, considering the total only topped $900 billion for the first time last year.
What should be more troubling for anyone interested in trade imbalances is the actual imbalance.
In other words, what about the relationship between exports and imports? Exports divided by total trade as opposed to exports minus imports.
It is more productive to visualize our business as a pie, a pie that continues to grow. It is best viewed as a pie chart rather than a bar chart.
Even here, 2021 will be a year that stands out. From 2008 to 2020, the percentage deviated only once from 40% exports and 60% imports, even as the trade deficit fluctuated. This was in 2014. The percentage was 41%.
It’s not just a big number. It is also a slow number.
In 2020, beleaguered by the pandemic, the number fell to 38%. When the 2021 data is released in early February, it will have remained at 38%