The overall U.S. trade deficit rose 12.2% last year, nearing $1 trillion as Americans purchased large volumes of foreign machinery, medicines, industrial supplies and car parts, according to data released Tuesday by the Commerce Department.
The goods and services deficit reached $948.1 billion, its largest total on record, after rising $103 billion from the previous year.
The data showed evidence of the U.S. economy's continuing recovery from the pandemic, which had held down spending on services such as travel and entertainment and pushed up purchases of imported goods. Rapid inflation and higher energy prices were responsible for some of the growth, because the trade data is not adjusted for inflation.
The numbers also showed signs that global supply chains appear to be reshuffling, as the U.S. government erects more barriers to trade with China and businesses seek to diversify where they get materials and goods. The Biden administration has identified the nation's reliance on China for materials such as solar panels and electric vehicle batteries as a security risk, and introduced incentives and penalties to try to persuade companies to change supply chains that proved vulnerable to pandemic disruptions.
The U.S. trade deficit in goods with Mexico, Canada, India, South Korea, Vietnam and Taiwan all grew strongly last year as manufacturers sought new sources of foreign products.
Still, many companies have so far proved unwilling or unable to cut ties with China, which continues to house the world's largest concentration of factories. Despite rising tensions between the world's biggest economies -- which were further strained last week by the discovery of a Chinese spy balloon flying over the United States -- trade between the countries remains strong.
Overall trade with China last year easily surpassed previous records, and the U.S. trade deficit with China grew 8.3% annually to $382.9 billion, the second highest total on record.
There was also little sign that the United States is retreating from trade with the world overall, even as geopolitical tensions with Russia and China rise.
Russia's war with Ukraine has pushed up energy and food prices globally and stoked inflation, but it has also played a role in bolstering American trade. After cutting many economic ties with Russia, the European Union has turned to purchasing more energy products from the United States.
Partly as a result of shipments of crude oil, fuel oil and natural gas to Europe, total U.S. exports grew more quickly than imports last year. A recovery in the U.S. travel and transportation sector after the pandemic also pushed up exports of American services.
The overall volume of U.S. imports remained much larger than exports, however, resulting in a trade deficit. Exports of goods and services rose 17.7% to $3 trillion, while imports rose 16.3% to $4 trillion. The strong value of the U.S. dollar also made foreign goods cheaper than American ones, driving up the trade deficit.
In December, U.S. exports fell slightly from the previous month to $250.2 billion, as the global economy slowed and the United States sent fewer industrial materials and consumer goods abroad. Imports edged up to $317.6 billion.