After Two Incredible Years, U.S. Trade Will Slow, Possibly Until 2025

U.S. trade growth will be slow to nonexistent for many U.S. airports, seaports and border crossings for the next two to three years, if history is any indicator.

When the U.S. Census Bureau releases annual statistics for 2022 next month, the United States will have topped $5 trillion in total trade for the first time ever. That’s behind a robust growth rate in the neighborhood of 17%.

Exports should be right at $2 trillion. That will be a “first-ever” if they top that total. Imports will surely have surpassed $3 trillion for the first time.

The growth in exports, which stood at 22.81% through November, will almost certainly be the largest percentage growth ever. It will topple the 2010 gain of 21.06%, as the United States and the world came out of the Great Recession.

And that — record exports, record imports, record trade — is, of course, the “problem.” All that growth is unsustainable. Especially because it is the second consecutive year of breakneck gains.

In 2021, as the country emerged from the global Covid-19 pandemic and two successive years of declining U.S. trade, total exports and imports increased 21.97%, a gain that was second only t0 2010, when U.S. trade increased 22.05%

Were it not for the Russian invasion of Ukraine almost a year ago, it is highly likely the “reckoning” that so often comes from a gain in excess of 20% might have happened in 2022.

But the Russian invasion brought additional instability to the global economy, largely due to issues related to Russian oil and both Russian and Ukrainian grain trade. And that led to inflation, most noticeably from a trade perspective in oil, refined petroleum and natural gas, including liquid natural gas, our top three exports and among our top three imports.

In fact, as recently as last August, U.S. trade was tracking ahead of a 20% gain, as it had since January.

The decline to 17.21%, the percentage growth rate through November, has been relatively rapid and almost certain portends what is to come.

It would be consistent with what happened after the last two years of rapid growth in U.S. trade, in 2000 and 2010.

In 2000, U.S. trade grew 16.25%, more than double the percentage of 1999 and five times that of 1998. In early 2021, we often forget, the U.S. was entering a recession. Then came the Sept. 11 terrorist attacks on New York City and Washington, D.C.

It was lights out for trade for the final quarter of the year. U.S. trade fell 6.49%.

Interestingly enough, New York City was the nation’s leading Customs district that year, supplanting Los Angeles for one of the only times in decades. That was not some sympathy move by the global trading community — that was due to a sharp decline in U.S. imports from Asia due to a moribund economy, which tend to arrive at the ports of Los Angeles and Long Beach.

And then U.S. trade fell again, in 2002, off a slight 0.84%. Not until 2004 did trade growth again top 10%.

The circumstances in 2010 were, in essence, opposite of those a decade prior. In the first, trade had already risen to a peak and then fell because of the events — the recession and the terrorist attacks. In 2010, trade rose after the event, the global mortgage-led financial crisis.

Trade growth remained in double digits in 2011 but didn’t top 4% until six years later, in 2017. Two of those years, in 2015 and 2016, it fell.

So, in 2023, the United States is coming off two of the strongest back-to-back years for trade growth ever. In both 2000 and 2010, the United States saw several years of slow growth after big gains.

While unforeseen triggers can affect trade growth — a significant spike in oil prices, for example — all things considered, slow to nonexistent trade growth should not be unexpected.