U.S. Trade Deficit: Shift from China to the Rest of the World

The U.S.-China trade war has had a lasting impact on the U.S. trade deficit, redirecting a significant portion of it from China to other countries. From Q3 2018 to Q3 2024, the U.S. trade deficit with China as a percentage of GDP decreased from 2.0% to 1.0%, while the deficit with the rest of the world grew from 2.2% to 3.0%. This shift may reflect trade rerouted through intermediary countries to bypass trade restrictions imposed on U.S.-China trade.