U.S. merchandise trade topped $5 trillion in 2022 for the first time, according to data released today, a fact that is as counterintuitive as it is remarkable.
It was counterintuitive given the consistently antagonistic policies toward free trade over the last six years from former President Donald Trump and current President Biden.
It was remarkable also. It took the nation 10 years to surpass $4 trillion after first passing $3 trillion but just four years to move from $4 billion to $5 billion.
The power of current events over politicians and policy are what is revealed in those statistics, at least in this case. First, the Covid-19 pandemic led first Trump and later Biden to shovel vast sums of cash into the financial system to stave off recession or worse, largely into the hands of consumers but also to businesses in the form of loans that were largely forgiven.
That was the first shove toward inflation, which had been tamed through most of the presidency of Barrack Obama. Consumers and businesses, flush with cash, went on buying sprees at a time when manufacturing was hobbled.
Then came the Russian invasion of Ukraine, which created further supply-demand imbalances, particularly in fertilizers, grains and oil. That provided additional inflationary pressure.
As part of total trade topped $5 trillion in 2022, total exports surpassed $2 trillion for the first time and imports surpassed $3 trillion for the first time, according to U.S Census Bureau data.
I had predicted each of the milestones were likely in separate posts for exports, imports and total trade over the last couple of months.
The U.S. trade deficit, which first surpassed $1 trillion in 2021 to little fanfare, did so again in 2022.
Interestingly enough, despite the stiff Chinese import tariffs put in place by Trump and kept by Biden, despite the rhetoric for bringing back manufacturing jobs ringing throughout the halls of Congress and elsewhere, despite the United States becoming a global leader in energy exports, the “balance of trade” has barely moved in recent years, tilting only slightly more toward imports rather than exports.
The balance of trade — the relationship between exports and imports — moves only slightly over time but finished the year at 39% exports to 61% imports. It had dipped to 38% in 2020 and 2021 after 11 consecutive years at 40% or greater.
The final 2022 figures were $5.31 trillion in total trade, $2.06 trillion in exports and $3.25 in imports. Total trade increased 15.79% over 2021, exports increased 17.59% and imports increased 14.67%. The deficit ended up at $1.18 trillion, a record.
U.S. exports and imports with a number of leading trade partners surpassed records, including with the top three: Canada, Mexico and China. Those three alone accounted for 43% of all U.S. trade, in line with recent years.
Canada’s trade with the United States topped $792.22 billion, the first time a country has ever conducted more than $700 billion in trade with another country and topping the record it set with the United States in 2014. It actually topped its previous record in the first 10 months of the year. That record had been at $655.55.
For Canada, it was the second consecutive year atop the leader board. The rising prices for oil and gasoline are largely responsible for the record trade; Canada is, by far, the largest importer of oil into the United States, at 57%.
Mexico finished second with $779.31 billion, surpassing $700 billion only one year after surpassing $600 billion for the first time. Mexico is a tremendous partner in automotive trade, from parts to vehicles, as well as white goods like refrigerators and washing machines, TVs and computer monitors, and energy. It accounted for 11% of U.S. oil imports, meaning the two USMCA partners accounted for better than 68% of the total.
Both Canada and Mexico have trade that is more balanced than the U.S. average of 39%, with Canada at 45% in U.S. exports and Mexico at 42% in U.S. exports.
China, the third-ranked trade partner, has been knocked from its top perch by the Trump-Biden tariffs but topped $600 billion for the first time, after narrowly missing it in 2018, the second to last year it was the United States’ top trade partner. That year, its trade totaled $599.52 billion. The 2022 total was $690.59 billion.
As is well known, China is a large importer into the United States, though its percentage of U.S. imports has decreased in recent years despite overall increases in U.S. imports. The percentage of China trade that was a U.S. export was 22%, well below the national average of 39%. Despite that low percentage, the last three years have seen the highest percentages ever, albeit only slightly higher than some previous years.
The nation’s leading exports and imports are largely petroleum products.
On the export side, the nation’s top three were gasoline and other refined petroleum products, oil and natural gas, including LNG. As recently as 2015, oil ranked as the 28th most valuable export, natural gas as No. 19. Refined petroleum, often from imported oil, has ranked first or second for a number of years, including first for the second consecutive year.
Refined petroleum and oil topped $100 billion in value for the first time; natural gas narrowly missed.
Until 2020, the perennial No. 1-ranked export was aircraft and some related fuselage parts, largely a Boeing
On the import side, oil was the top import for the first time since 2014 — the year Canada had set the total trade record. The total almost surpassed $200 billion for the first time since 2014, ending at $198.39 billion. Passenger vehicles, which ranked second in 2022, had ranked first since 2015.
Cell phones and related equipment ranked third with computers ranking fourth, both topping $100 billion.
Looking at the nation’s top “ports” — its airports, seaports and border crossings — Chicago’s O’Hare International ranked first, followed by the Port of Los Angeles and Port Laredo, a border crossing in Texas.
For the first time, according to the U.S. Census data, the nation’s top 13 all topped $100 billion, though the data. Following the top three are the Port of Newark, JFK International, the Port of Houston, the Port of New Orleans, Detroit’s Ambassador Bridge, Los Angeles International Airport, the Port of Savannah, the Port Huron, Mich. Blue Water Bridge, the Port of Long Beach and, for the first time, the Port of Virginia.