The U.S. Foreign Trade is structurally in deficit.
In 2023, the deficit in the balance of goods exceeded one trillion dollars, which amounted to 3.8 percent of GDP.
While this may be seen as a reflection of the strength of the American consumer, Donald Trump analyzes it as the result of ‘violent treatment’ and ‘abusive practices’ from his trading partners.
The President-elect intends to address this dimension with renewed vigor compared to his first term, during which the increase in the effective tariff rate was not substantial.
The two countries with which the US has the largest bilateral deficit are China, with two hundred seventy-nine billion in 2023, followed by Mexico with one hundred sixty-one billion.
These countries are among the first targets of the Trump 2.0 era, amid tensions over issues such as drugs or immigration.
Trump’s last announcements could be a first step toward far more prohibitive tariffs on China, while casting doubts over the United States-Mexico-Canada Agreement.
Canada, which is also targeted, is the country with which the bilateral deficit has worsened the most in relative terms since 2016 among the US’ main counterparts.
In any event, Trump’s approach is called into question, in terms of objective and global efficiency.
Admittedly, the deficit with China has narrowed by 25% between 2017 and 2023, as Trump’s first term marked the start of an open trade war with this country.
Moreover, China’s share of total US imports of goods has fallen from 21% to 14% over the same period.
But, in the meantime, the overall US trade deficit in goods has continued to expand, rising by 33% since 2017, despite having slightly lowered in relation to the GDP, from 4.1% to 3.8%.
Some players have also thrived at taking advantage of China’s strategies to circumvent US policies. As a result, the US bilateral deficit with countries such as Vietnam and Thailand, which have become platforms between the two superpowers, has soared in the meantime.
And, with regard to the US/China competition for influence, Chinese exports have not decreased at an aggregate level.
