The trade relationship between the United States and China has been a topic of debate, especially over the past decade. The US has consistently run a trade deficit with China, meaning it imports more goods from China than it exports to the country. Over the last five years (2020-2024), the total trade deficit between the US and China (trade in goods) amounts to a staggering $1.6 trillion.
The rising US trade deficit with China is one of the major causes of the ongoing trade war between the two largest economies. To address the growing trade deficit and other trade-related issues, the US initiated a trade war with China in 2018 under the Trump administration. Additionally, in his second term, Trump further slapped an additional 10% tariff on China, making the trade relations between the two nations more tense.
Key Takeaways
- Over the past five years, the U.S. trade deficit with China stayed high, averaging about $323.48 billion per year and totaling $1.6 trillion.
- Even with trade wars and restrictions, both imports and exports between the U.S. and China have grown, but U.S. imports have risen faster, widening the trade gap.
- Trade between the U.S. and China dropped in 2020 due to COVID-19 but bounced back in 2021 and 2022, with 2022 showing a high U.S. trade deficit of $382 billion.
US-China Trade Deficit: A 5-Year Overview
The table below highlights the US-China trade in goods data from 2020 to 2024, including exports, imports, and the trade balance (deficit).
| Year | U.S. Exports (Billion $) | U.S. Imports (Billion $) | Trade Deficit (Billion $) |
|---|---|---|---|
| 2024 | 143.55 | 438.95 | -295.4 |
| 2023 | 147.78 | 426.89 | -279.11 |
| 2022 | 154.13 | 536.26 | -382.13 |
| 2021 | 151.44 | 504.25 | -352.81 |
| 2020 | 124.58 | 432.55 | -307.97 |
| Total | 721.48 | 2,338.90 | -1,617.42 |
The data is sourced from the United States Census Bureau.
Key Trends in US-China Trade in Goods
Over the past five years, the US trade deficit with China has been persistently high, averaging approximately $323.48 billion per year. The cumulative U.S. trade deficit with China over this period has been a whopping $1.6 trillion, which is roughly 5% of US GDP.
Despite trade wars and other restrictions, the U.S. deficit with China has been on an increasing trend. Both US imports from China and exports to China have increased over the years. However, imports have increased at a higher rate, resulting in a widening trade gap.
The year 2020 experienced a decline in both U.S. imports and exports from China due to the global pandemic. However, trade recovered strongly in 2021 and 2022 as the COVID impact eased. The figures for 2024 indicate a massive rise in both U.S. imports and exports, but the trade deficit remains high at $295.4 billion. This means that while the trade volumes between the two countries are increasing, the US trade deficit with China continues.
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Why Does the US Have a Trade Deficit with China?
The US trade deficit with China is a result of several factors. One key reason is China’s manufacturing cost advantage. China has been referred to as the “world’s factory” for years because of its low labor costs and effective manufacturing capabilities. This enables Chinese businesses to make more products at a significantly lower price than US manufacturers. Thus, it makes Chinese goods more appealing to American consumers and businesses.
Another factor is the high consumer demand in the US for cheap Chinese products, including electronics, apparel, and household items. This generates increased imports from China. Additionally, many US companies rely on Chinese suppliers for components and raw materials. This interdependence means that even goods labeled “Made in the USA” often contain parts manufactured in China. All these account for higher Chinese imports and contribute to the rising U.S. trade deficit with China.
The US-China Trade War
To deal with the rising trade deficit and other trade-related issues with China, the US launched a trade war during the Trump administration in 2018. The US imposed tariffs on more than $360 billion worth of Chinese imports, covering sectors such as steel, aluminum, and technology. The aim was to increase the price of Chinese products and boost local production.
As a retaliatory measure, China retaliated by imposing tariffs on US agricultural products like soybeans and other manufactured items. In January 2020, the US and China signed a Phase One trade deal under which China promised to buy another $200 billion more of US goods and services over two years (2020-2021). However, China partially failed to meet these targets due to the COVID-19 pandemic.
Trump in his second term revived the trade war with even more vigor by slapping an extra 10% tariff on Chinese products. This further escalated the trade tensions between the two nations.
Conclusion
The U.S. trade deficit with China averaging about $323.48 billion per year and totaling $1.6 trillion during the last five years. Although the trade war temporarily decreased the U.S. trade deficit, it did not alter the overall trend. The US deficit with China continued to grow. The high tariffs imposed by both nations resulted in increased costs for businesses and consumers in both countries.
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