The US Gargantuan Trade Deficit with the World

International Trade has been heralded as the greatest thing all the way back to the 1970s. The claim was based on the premise that nations would exchange goods and services they were able to make, and that countries wouldn’t be taken advantage of or run big deficits and debts.

It was naive, and as we know are well aware, the United States has the largest trade deficit, debt, and interest on debt payments on the planet. Its government has been running its “credit cards to the limit” while barely scratching up enough to pay the interest. The 2024 US Trade in Goods Deficit reached a record $1.2 trillion, marking the fourth consecutive deficit above $1 trillion and the sixth increase in the last eight years (U.S. Census Bureau data).

These are mind-boggling numbers, as Astronomer Carl Sagan once said, “billions and billions.”  But there’s no humor here. It’s a vicious, overwhelming number that builds like a mountain, and it’s pressuring all areas of government.  President Trump mentioned a total $19 Trillion has been lost through the decades in these trade deficits. The new US total national debt sits at $36.6 Trillion. As you can see in the Statista debt projections, it will hit $54 Trillion in 9 years. No one knows how this will be paid for, even if President Trump’s tariff plan continues.

The problem is so severe the country is on the verge of economic collapse. Something radical is needed, and you know President Trump is trying. However, there are political efforts to stop the tariffs and put the US back on its debt train. We’ll see who wins the battle in the coming months.

Let’s look at a summary of the 2024 deficit numbers:

• Overall Deficit:

  The total deficit for both goods and services for 2024 was $918.4 billion, up from $784.9 billion in 2023, according to the Bureau of Economic Analysis (BEA). 

• Exports:

  Total exports were $3,191.6 billion, an increase of $119.8 billion from 2023. 

• Imports:

  Total imports reached $4,110.0 billion, a rise of $253.3 billion from 2023. 

• Goods Deficit:

  The goods deficit increased to $1,211.7 billion, a rise of $148.5 billion, or 14.0%, compared to 2023. 

• Services Surplus:

  The services surplus increased to $293.3 billion, a rise of $14.9 billion, or 5.4%, compared to 2023. 

• Deficit as a Percentage of GDP:

  The goods and services deficit was 3.1% of current-dollar gross domestic product in 2024, up from 2.8 percent in 2023. 

• Trade with China:

  The U.S. recorded a trade deficit of $295 billion with China, which was the widest of any U.S. trading partner. 

• Other Major Trade Partners:

  The U.S. also had large trade deficits with the EU ($235.6 billion), Mexico ($171.8 billion), and Vietnam ($123.5 billion). 

President Trump Is the Only Person Willing to Deal With It

While Democrats have consistently said there is more room for a rising debt ceiling, President Trump is trying to remedy the problem. The recent tariff announcements are getting the attention of all trading nations.  He’s not getting much approval from anyone. No one wants to face the short-term pain and they’re sticking their head in the sand. The deficits had to be funded somehow and the US government did it through raising taxes, selling assets, money printing and other borrowing.

Because Americans don’t earn enough to pay for the huge amount of imported goods every year. Out of pure dishonesty, the media have chosen not to discuss the deficit nor the potential for a debt default. It can’t be swept under the carpet however.  Various credit reporting agencies such as Moody’s have downgraded the United States credit rating, due to continued debt ceiling rises, its massive ongoing debt, along with continuous, almost guaranteed trade deficits.

It’s a horrible picture of a government and political ideology/strategy that’s putting the nation on the verge of collapse. Elon Musk, manager of the DOGE cuts, has cited it in TV interviews and social posts, and adds that the US is on the verge of insolvency.

2023 Trade Deficit Stats Give Us a Clear View

While 2024 details aren’t ready (they’re worse), the 2023 stats were similar enough so we can review them now to gain insight.

President Trump’s Hated Tariffs: Is it the Solution?

The issue for some Democrats and Americans is that they believe the deficit can’t be fixed nor can the debt. They believe strongly that it should be kept rolling for later generations to deal with. That would be your kids and grandchildren. Importing tens of millions of immigrants won’t solve that.

Since none of them have come up with a comprehensive plan, nor want to present one, we default to President Trump’s actions. You can read more about the Trump Tariffs and read a post tariff analysis.  On the promising side, Trump’s tariff plan will create a lot of new opportunities for Americans.

The Tariffs on Canada

Many countries, including Canada, will be asked to pay tariffs on their exports. Canada’s trade deficit is small and comprised mostly of oil exports from Alberta.  So the tariffs on Canada aren’t fair.

Trump is levying them on Canada, because he wants all vehicles, steel/aluminum fabrication to be done in the US. It’s brought significant indignation from Canadians, and has even pushed them into the hands of a politician who will break the country up.

I think Trump will back down on some of the vehicle manufacturing tariffs because causing an isolated country like Canada to fall apart would be too much to bear, given the two country’s shared past. He says repeatedly that things will be okay and that tariff negotiations will be happening. All Canada has to do is keep their cool and negotiate in good faith.

Right now in April it’s a charged atmosphere, but as the months pass, new agreements will be made. However, Trump will not accept further trade deficits, so China, Canada, Europe, Mexico and Vietnam for instance must buy more American products. Trump is well aware of non-trade barriers and he will be very strict with that game-playing (i.e. Japan).

The tariffs will impact stock market predictions and the tariffs will affect the housing market outlook.