The Commerce Department announced shocking data for America’s trade deficit for 2021.
The full-year trade deficit for 2021 soared to $859.1 billion, far surpassing the previous record of $763.53 billion set in 2006. Commerce Department records go back as far as 1960.
America’s manufacturing sector suffered greatly during the pandemic, despite unprecedented, generous stimulus checks going out to most Americans. The stimulus checks were meant, in theory, to stimulate domestic economic activity. Instead, most of that money went overseas towards purchasing foreign imports, particularly products made in China.
The trade deficit with China soared to $355.3 billion. That was a 15 percent increase over the previous year.
American exports rose slightly in 2021, to $2.53 trillion. But total imports of goods rose to $2.85 trillion last year, while imported services rose to $535 billion.
Such record-high trade deficits puts pressure on the overall U.S. budget. Deficits require the government to take on additional debt.
Trade exports subtract from the official measure of Gross Domestic Product. Chronic trade deficits can weaken a nation’s currency, resulting in both higher inflation and lower wages for American workers. A chronic or growing trade deficit could eventually lead to a deflationary situation, including recession, or, in a worst case scenario, an economic depression.