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The slowdown in demand during the pandemic for services, usually a strength for the American economy, also pushed up the trade deficit, as foreigners drastically reduced their spending on tourism and education in the United States. The United States typically records a large trade surplus in services, which is subtracted from the overall deficit. Last year, the services surplus fell 5.6 percent to $231.5 billion.
For the month of December, the goods and services deficit rose 1.8. percent to $80.7 billion, just shy of a monthly record set in September.
The data also revealed the shortcomings of a trade deal that Mr. Trump signed with China in 2020. The agreement was designed to lower the U.S. trade deficit with China, which Mr. Trump viewed as a sign of America’s failing trade policy, and to boost purchases of American farm goods before the 2020 election.
China committed to buying an additional $200 billion worth of American goods and services above a 2017 baseline by the end of 2021. But those purchases did not materialize. In fact, data released Tuesday showed that China bought only 57 percent of the American exports it had committed to purchase under the agreement, according to tracking by Chad Bown, a senior fellow at the Peterson Institute for International Economics.
That was not even enough to reach the import levels from before the trade war, Mr. Bown said. In other words, China actually bought none of the additional $200 billion of exports that the trade deal had promised, he said.
“The data released today confirms that China has fallen well short of the purchase commitments they made under the Phase One agreement,” Adam Hodge, assistant United States Trade Representative for media and public affairs, said in a statement. “We have engaged the PRC on its shortfalls for months, but have not seen real signs towards making good on the purchase commitments and our patience is wearing thin.”
He added that the trade deal Mr. Trump signed in 2020 “did not address the core problems” with China’s state-led economy, and that the United States would continue its “efforts to shape the environment around China.” That included “building resilience and competitiveness at home, diversifying markets, limiting the impact of Beijing’s harmful practices, working with allies and partners, and using the full range of tools we have to defend American economic interests,” he said.
