US President Donald Trump loves to portray his country as a victim of free trade. That’s because the United States buys many goods from all over the world, but sells far less in exchange. The US has done this year after year for decades – in fact, for 41 years in a row, and counting. It has gone ever deeper into debt to the rest of the world, running a trade deficit to the tune of $750 billion (704 billion euros) in 2016 alone.
Trump keeps calling that “unfair.” But is it really? And does running trade deficits actually harm the United States?
The US trade deficit is caused by American businesses importing more goods than the country exported. By contrast, the US exported more services than it imported – in 2016, it ran a surplus of $250 billion in the value of services exported over the value of services imported.
Those numbers played an important role in the US presidential campaign. Many Americans believe the US trade deficit in goods is linked to a long-term decline in US industries, in which factories have moved abroad – especially to Mexico and China – and millions of American jobs lost. Trump was elected on a promise to turn that situation around.