A Year Like No Other: Overview of U.S. Trade in 2020

March 22, 2021
Gulbin Yildirim and Ian Saccomanno are International Economists in the Office of Trade and Economic Analysis

Overshadowed by a global pandemic, 2020 was a challenging year for U.S. trade as unprecedented social restrictions, changing work patterns, and supply-chain disruptions caused a worldwide recession and hampered trade flows. U.S. exports of goods and services fell 15.9 percent to $2.1 trillion and imports declined 9.5 percent to $2.8 trillion in 2020. The drop in exports was the largest on record while imports saw their largest decline since 2009. Because exports decreased more than imports, the U.S. trade deficit increased 18.2 percent to $681.7 billion, the highest level in the last 12 years (Figure 1). A record-breaking goods deficit and shrinking services surplus were equally responsible for the increase in the overall deficit.

While declines in both exports and imports were largely expected because of the recession, the deterioration in trade balance was unusual. In the past recessions, U.S. trade deficits shrank as the fall in domestic consumption led imports to drop more than exports. For instance, during the Great Recession, the U.S. trade deficit contracted by almost 45 percent (Figure 1).

The unique nature of the COVID-19 recession, the first global recession solely triggered by a pandemic, was behind this key difference. The efforts to fight the virus increased the demand for imported medical products which helped imports bounce back quickly. Lingering social and economic effects of the pandemic, on the other hand, hindered recovery in key U.S. export categories.

Declining Exports Led the Increase in the U.S. Goods Trade Deficit

The U.S. experienced a record-high goods trade deficit ($905.2 billion) with exports decreasing at more than double the rate of the decline in imports (-12.9 percent vs. -6.4 percent).

The sharp drop in exports was led by the largest U.S. export sectors, including aircraft & spacecraft, vehicles, petroleum products, and machinery (Figure 2). These four sectors accounted for 41 percent of total goods exports in 2019 but were responsible for more than 70 percent of the overall export decline in 2020. The pandemic hit these sectors particularly hard as reduced domestic and international travel, uncertainty over consumers’ incomes, and plant closures caused both supply and demand to plunge at the same time.

On the other side of the scale, higher imports of gold and medical products, including pharmaceuticals and personal protective equipment (PPE), partially offset the decreases in other categories such as petroleum products. According to ITA’s analysis, PPE imports increased by more than 240 percent, the bulk of which came from China (72 percent). Similarly, imports of gold soared nearly 260 percent in value as the uncertainty from the pandemic curbed risk-appetite in markets and turned investors to safe haven assets. Switzerland was the largest supplier of gold to the U.S., boosting U.S. goods imports from Switzerland to their highest level on record.

Decreased Travel Exports Led the Drop in the U.S. Services Surplus

Although 2020 saw a record-high deficit in goods, a shrinking surplus in services equally contributed to the increase in the overall trade deficit. U.S. exports and imports of services fell 21.0 percent and 22.1 percent, respectively, in 2020 and the overall surplus in services decreased 18.6 percent to $233.9 billion, the lowest level since 2012. By comparison, the decline in the services surplus at the peak of the Great Recession was only 4.3 percent.

Travel and transport services led the decline for both exports and imports of services as each fell more than 50 percent from 2019. Other services categories, however, proved more resilient to the pandemic (Figure 3).

Automotive, Oil and Aircraft Sectors Dominated Declines in Goods Trade with Top Partners

Goods trade with top partners was also shaped by COVID-19’s severe impact on the largest export and import sectors of the United States (Figure 4). Trade with Canada and Mexico fell significantly in both directions, led by declines in automobiles and auto parts and petroleum products. The decline in trade with our two neighbors accounted for nearly 40 percent of the decline in total goods exports and over 50 percent of the drop in total goods imports.

The decrease in exports to the European Union (EU) was largely driven by fewer aircraft sales. Aircraft parts and passenger cars were the categories where imports from the EU fell the most.

One positive development for American exporters was the increase in soybeans and crude oil shipments to China which led goods exports to that country to grow 17.1 percent.

Imports from China fell 3.6 percent with declines in telecommunication equipment, apparel, and footwear.

In contrast, imports from several South Asian countries such as Vietnam, Malaysia, Singapore, and Taiwan reached their highest levels on record.  Higher demand for electronics, machinery, furniture, and apparel played an important role in increased imports from these countries.

More data on national and subnational trade, including interactive visualizations, can be found at https://www.trade.gov/trade-stats-express.