Former Associate Manager, International Policy, U.S. Chamber of Commerce
February 16, 2023
2022 was another strong year for U.S. trade, according to official statistics released last week by the U.S. Department of Commerce. The year’s strong growth in exports and imports came as the economy recovered from the strains of the pandemic and normalized after unprecedented U.S. fiscal and monetary policy actions.
Russia’s full-bore invasion of Ukraine, launched in February, caused supply shocks that reverberated throughout the global economy, with especially strong effects on energy and food. China’s continuance of “Zero-Covid” policies throughout most of the year affected manufacturing production and port activity, contributing to supply chain snarls.
High inflation persisted, declining as the year progressed, prompting a strong response from the Federal Reserve to temper rising prices. The Bureau of Labor Statistics calculates that prices for imported goods increased 3.5% in 2022, down from the record 10.3% rise in 2021. Export prices rose 5%, down from 14.9% in 2021. The Commerce Department’s trade figures are not adjusted for inflation.
This economic uncertainty dampened consumer demand, decelerating the surge driven by the U.S. pandemic response. A stronger U.S. dollar also made American exports more expensive, rendering them less attractive to trading partners.
Even so, trade proved resilient, providing benefits to U.S. workers, industry, and consumers. Consider:
Exports and imports chart new highs. Exports of goods and services increased $453.1 billion to $3,009.7 billion, passing the $3 trillion mark for the first time. Imports of goods and services hit $3,957.8 billion, up $556.1 billion from 2021 and the highest on record. Exports of goods alone increased $324.2 billion to $2,085.6 billion in 2022 while goods imports increased $425.7 billion to $3,277.3 billion, both setting records. Exports and imports of services each increased by well over $100 billion in 2022, marking a strong year for services growth.
Export growth holds strong. U.S. exports of goods and services increased by 17.7% in 2022, and goods exports increased by 18.4%. Both growth rates are impressive showings following strong 2021 numbers, proving trade resilience to a slowing economic recovery from the pandemic and other headwinds faced in 2022. Services exports also grew, surpassing the previous year’s total by 16.2%. The U.S. set export records with 73 trading partners in 2022.
FTAs make big markets. Goods exports to America’s 20 free-trade agreement (FTA) partners continue to make up nearly half (more than 46.4% in 2022) of all U.S. goods exports.Exports to the group increased 17.7% year-over-year and made up 45% of U.S. goods export growth in 2022. Additionally, on a per capita basis, the citizens of these 20 countries bought nearly 14 times the volume of American-made goods as other economies. This is a remarkable performance given that these markets represent approximately 6% of the world’s population outside the United States.
Deficit rises. While the trade balance is a poor measure by which to gauge the quality of a country’s trade policy, the U.S. trade deficit also rose. This is due in part to a combination of inflation raising prices and a stronger U.S. dollar making exports more expensive. The combined goods and services deficit was $948.1 billion, the highest deficit on record and up from $845 billion in 2021. A record goods deficit and smaller services surplus contributed to the overall increase in the trade balance. The goods and services deficit as a percentage of GDP in 2022 remained at 3.7%, below the levels reached in the 2000s.
Services trade soars. Exports and imports of services increased more than $128.9 billion and $130.5 billion, respectively, picking up the pace from 2021. Services exports passed $924.2 billion, the highest total on record and more than making up for pandemic-related decreases. Services imports also reached a record high at $680.5 billion. Resumption of travel played a significant role in the services trade rise in 2022, making up 49.5% of the export increase and 43.3% of the import increase. Worldwide, services trade growth has been outpacing merchandise trade growth by a wide margin.
U.S. energy trade builds on its boom… Crude oil and petroleum exports in 2022 surged past last year’s record highs by 68.6% and 55.7%, respectively, reaching $116.8 billion and $305.7 billion. The surge reflects both higher prices and higher volumes. The energy balance recorded a surplus, a shift seen only in recent years as the U.S. has evolved from being the world’s top energy importer to a significant net exporter. Russia’s invasion of Ukraine further fueled this trend, positioning the U.S. as an alternative energy source for countries looking to reduce energy dependence on Russia.
…As trade with Russia craters. Though Russia has not been a significant U.S. trading partner in recent years, U.S.-Russia trade collapsed due to sanctions imposed on Russia. Goods exports to Russia fell 73.1% in 2022 to $1.7 billion while imports fell 51.2% to $14.5 billion. Due to the U.S. oil ban that took effect, U.S. imports of crude oil from Russia dropped to zero in May after reaching $510.6 million in the first several months of the year.
Americas first. Canada was the top market for U.S. goods exports again in 2022 with exports reaching $356.1 billion. Mexico took the third spot (behind the European Union) with a U.S. export total of $324.4 billion. The Americas region was the destination of 43.4% of U.S. exports. That is significantly more than the shares held by many Asia-Pacific economies (26%) and all of Europe (23.6%). The nations of the Americas accounted for nearly half of the increase in U.S. merchandise exports in 2022, again demonstrating the value of the region’s network of FTAs.
Transatlantic ties still bind. As a single market, the EU remains America’s top trading partner (combining exports and imports) when services are included. Goods exports increased 28.6% in 2022, pushing the 27-nation bloc past Mexico as the second largest export market for the U.S. The UK, which left the EU in 2020, was the largest single-country goods export market in Europe with $77.3 billion. The U.S. also recorded a record high trade surplus with the UK, which reached $13.3 billion. Though full services data are not yet available for 2022, services play an outsized role in transatlantic trade. The U.S. is expected to once again run a services surplus with the EU.
U.S.-China trade growth slows… China remains the top source of U.S. goods imports, which increased $31.8 billion to $536.8 billion in 2022. Goods exports to China increased $2.4 billion, reaching $153.8 billion. The goods deficit with China increased $29.4 billion to $382.9 billion, but it remains below the record deficit of $418.0 billion set in 2018. However, China’s share of U.S. exports and imports fell slightly in 2022 compared to 2021.
…While other U.S.-Asia trade strengthens. U.S. trade with many Asian markets once again held strong. U.S. goods exports to the ASEAN region increased 19% year-over-year, reaching a record high of $111.3 billion. Goods exports to Singapore jumped 30.1% to a record $46.2 billion, while exports to India increased by 18.2% to a record $47.3 billion (following a 47.6% export increase in 2021). Exports to Taiwan increased by 18.7%, reaching a record $43.7 billion.
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