US trade deficit with China now $400 billion per year, much higher than in the 1990s

Conservative radio host Hugh Hewitt asked California Rep. Ro Khanna whether he would consider serving as the top Democrat on the new GOP-led House Select Committee on China. 

When the committee formed, House Republican leader Kevin McCarthy said it would "ensure America is prepared to tackle the economic and security challenges posed by the" Chinese Communist Party.

Khanna said he would be open to taking the position, adding that his concerns transcend national security.

"Our trade deficit with China has gone from about $80 billion a year in the 1990s to $400 billion a year," he said Dec. 12. "We've lost steel production, we've lost aluminum production, we've lost paper production, we've lost industry after industry to China. It has hollowed the middle class and working-class in this country, and it has left us less self-reliant."

Khanna’s claim on the figures is essentially on the money, although some experts disagree with what he says the numbers imply.

A country’s trade balance is the difference between the value of its imports and exports. A trade deficit occurs when imports exceed exports. 

The U.S. buys much more in goods and services from China than China does from the U.S.

Khanna’s office did not cite any figures to PolitiFact to back his statement. 

But the trade deficit can be measured in goods, or in goods and services, which is the more inclusive measurement. Both support Khanna’s claim. 

For goods, the highest the U.S. trade deficit with China reached in the 1990s was $69 billion in 1999. So, it was lower than what Khanna described, which means the increase is higher than what he stated.

In 2022, the goods deficit was $338 billion as of October, the latest U.S. Census Bureau figures show. Although we don’t yet have data for 2022’s last two months, the full-year deficit is likely to surpass $400 billion, based on the monthly average deficit for the previous 10 months. 

The last time the goods deficit exceeded $400 billion was in 2018 (when it was $418 billion).

The figures are similar when considering both goods, such as consumer products, and services, such as telecommunications.

The deficit was $67 billion in 1999 and on pace to exceed $400 billion in 2022, according to the Commerce Department’s Bureau of Economic Analysis.

Although they didn’t challenge Khanna’s numbers, two experts took issue with his connecting the trade deficit to the loss of manufacturing.

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Derek Scissors, a China expert at the American Enterprise Institute, a Washington, D.C.-based think tank, said the deficit doesn’t cost U.S. jobs, but high levels of imports from China make the U.S. vulnerable. 

For example, he said, "China dominates the production of chemical ingredients used in pharmaceutical products. What happens if they get upset with the U.S. over Taiwan?" 

Gary Clyde Hufbauer, a fellow with the Peterson Institute for International Economics, also a Washington, D.C.-based think tank, said that "with current inflation worries, the trade deficit with China is a blessing. Imports respond to strong U.S. demand for consumer goods and help contain inflation."

Khanna said the U.S. "trade deficit with China has gone from about $80 billion a year in the 1990s to $400 billion a year."

Whether measured in goods alone, or in goods and services, the U.S. annual trade deficit with China is on pace to be around $400 billion for 2022.

That’s significantly higher than in the 1990s, when it topped out at $69 billion for goods and $67 billion for goods and services, although some experts disagreed with Khanna’s suggestion that the trade deficit is bad for U.S. manufacturing.

Khanna’s statement is slightly off on the 1990s numbers, and the figure for 2022 is a projection. We rate it Mostly True.

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