Before President Trump increased tariffs, some companies tried to increase imports, which caused the trade imbalance to spike in December and end 2024 with the second-largest gap ever.
The trade deficit increased by over 25% to $98.4 billion in December, a significant rise predicted by last week’s unexpectedly huge goods imbalance. In November, the deficit was $78.9 billion.
The government reported that the U.S. trade imbalance was $918 billion for the entire year. After 2022, it’s the second-largest gap.
Trump threatened to impose 25% tariffs on Canada and Mexico earlier this week, but he ultimately agreed to a 30-day truce. A 10% tariff on Chinese goods has been implemented by the United States.
By attributing the U.S. trade deficits to unfair regulations by other nations, the president hopes to minimize them. In the end, his attempt to reduce the trade imbalance during his first term was unsuccessful; rather, it increased.
After Trump imposed further tariffs, the trade imbalance with China decreased over his first four years in office; however, the United States ultimately imported more commodities from other nations, including Mexico and Vietnam.
Important information: In December, imports increased 3.5% to $365 billion. The United States increased its imports of consumer products, computers, and industrial supplies.
The last month of 2024 saw a 2.6% decline in exports to $266.5 billion. The United States exported fewer automobile parts, oil, and medications.
The United States once again had the largest goods trade imbalance with China last year. In 2024, it came to $295.4 billion.
The goods trade deficit was $123.5 billion with Vietnam, $171.8 billion with Mexico, and $235.6 billion with the European Union. There was a $63.3 billion difference with Canada.
Those annual numbers do not include estimates for services. Trade deficits with other nations will be somewhat mitigated by the U.S. operating service surpluses with the majority of nations.
Big picture: Since President Jimmy Carter in the 1970s, the United States has had significant and growing trade deficits, and it is difficult to predict how this situation will improve. Not very soon, anyway.
Since the United States is the richest nation in the world, Americans can afford to purchase more imports; yet, many consumer goods and apparel items are no longer made in the country.
Considering the future: Eugenio Aleman, chief economist at Raymond James, stated, “It is evident that businesses and consumers are attempting to evade tariffs, driving imports to a record high.”
