US trade deficit to hit record high in 2022

Specifically, in December 2022, the US trade deficit increased by 10.5% compared to the previous month, to 67.4 billion USD. In December 2022, US goods exports reached 250.2 billion USD, down 2.2 billion USD compared to the previous month, while the country's goods import turnover increased by 4.2 billion USD, to 317.6 billion USD.

On an annual basis, the US goods and services trade deficit in 2022 increased to a record high of $948.1 billion (equivalent to 3.7% of GDP), higher than $845 billion (3.6% of GDP) in 2021.

According to the country's Ministry of Commerce, in 2022, although the country's exports increased by 453.1 billion USD to 3,000 billion USD, imports also increased by 556.1 billion USD to 4,000 billion USD.

The appreciation of the US dollar against the currencies of America's major trading partners has made US-made goods more expensive on international markets.

The dollar has strengthened against the currencies of America’s major trading partners since late December 2021 as the Fed embarked on its fastest rate-hike cycle in decades to curb inflation. Tighter monetary policies from global central banks have also eroded overseas demand for American goods.

Previously, on February 1, the FED raised its target interest rate by 0.25% and said it would continue to raise borrowing costs in an effort to curb inflation. The benchmark interest rate in the US is currently around 4.5-4.75%. This is the highest level since October 2007. In the announcement after the policy meeting, the FED stated that inflation "has cooled somewhat, but remains high". Thus, since March 2022, the FED has raised interest rates a total of 8 times.

Economists say the Fed’s efforts to reduce the cost of living will push the economy into recession. The Fed’s rapid rate hikes have caused home sales to plummet and prompted businesses to withdraw investment capital, two key factors that could slow the growth of the US economy. The Fed’s higher interest rates also add to economic instability abroad, which could negatively affect the US./.

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