January 5, 2023

The U.S. trade deficit in goods and services declined to $61.5 billion in November, after reaching an all-time high in March 2020.

In 2021, the annual U.S. trade deficit hit a new record at $845.0 billion. Higher tariff policies under the Trump and Biden Administrations have not made any significant dent in the trade deficit. Usually the trade deficit shrinks during a recession, but it grew rapidly during the Covid recession.

The widening trade deficit likely is due in part to the strong U.S. dollar. Though the value of the dollar, on a trade-weighted basis, peaked in October, it is still up +5.6% from a year ago.

Real exports of goods and services (adjusted for inflation) rose +3.5% q/q in 3Q22, up +11.3% from the same period a year before, recovering to above pre-Covid levels.

Real imports of goods and services fell -1.9% q/q in 3Q22, though they were still up +7.4% from the same period a year ago.