US trade deficit swells to $918.4 bn in 2024: What will be Trump's next move?

The US trade gap swelled last year to its second-largest on record, government data showed Wednesday, as deficits come under the spotlight with President Donald Trump’s return to the White House.

In 2024, the overall US trade deficit grew to $918.4 billion, widening 17 per cent from 2023 as imports ballooned more than exports, said the Commerce Department.

The trade deficit in goods also reached a new record for the year, in official data going back to 1960.

The high figures could attract renewed scrutiny under the new US administration, with Trump already threatening tariffs on major US partners over trade imbalances and other issues.

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Over the weekend, Trump announced fresh duties on the United States’ three biggest trading partners in goods – Canada, Mexico and China – before reaching deals with Canada and Mexico to halt the levies for a month as talks continued.

Chief among his justifications were concerns over illegal immigration and the flow of deadly fentanyl across US borders, but he has previously also pointed to America’s trade deficits with its neighbors.

Stock markets wavered as tariffs targeting Beijing came into effect Tuesday, with an accompanying suspension of duty-free exemptions for low value parcels sparking worry.

With Beijing’s announced retaliation, economies are on edge over the prospect of broadening trade wars.

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For all of last year, imports jumped by 6.6 per cent or $253.3 billion while exports increased 3.9 per cent by $119.8 billion.

Driving the growth in goods exports were products like computer accessories and semiconductors, while travel was a key factor behind services exports growth.

Imports surged on the back of goods like consumer goods, computers and semiconductors, as well as foods.

Uncertain path ahead

“Looking forward, the path for trade remains uncertain due to the capricious nature of the Trump administration’s tariff policies,” said Matthew Martin, senior economist at Oxford Economics.

“While Mexico and Canada may be spared, the tariffs on China stuck and we expect the European Union to be next in the cross-hairs,” he added in a note.

Martin expects computer and electronic products from China would likely be impacted the most, adding that there are risks involving chemicals and manufacturing equipment from the EU.

For all of 2024, the goods deficit with China – a major issue during Trump’s first administration – came in at $295.4 billion.

This was wider than values for the trade gap with North American neighbors Canada and Mexico combined, and more than the gap with the EU as well, according to government numbers.

In December alone, the US deficit rose by nearly 25 per cent to $98.4 billion, said the Commerce Department.

The figure was slightly above the consensus estimate by Briefing.com of $98.0 billion.

Imports rose 3.5 per cent to $364.9 billion while exports slipped 2.6 per cent to $266.5 billion for the month.

“The jump in import volumes may reflect companies efforts to accelerate imports to beat Trump import threats,” said Carl Weinberg and Mary Chen, of High Frequency Economics.

But they added it was hard to prove, given that strong exports also indicate “a fast-growing economy that is near its full potential level of output.”

Trump has threatened tariffs on the EU, previously saying they had treated Washington “very badly.”

(Except for the headline, this story has not been edited by Firstpost staff.)