• The Heritage Network
    • Resize:
    • A
    • A
    • A
  • Donate
  • Does the United States Really Have a Trade Deficit?

    Kenichiro Seki/ZUMA Press/Newscom

    In 2012, $3.4 trillion came into the United States through trade and investment, and $3.4 trillion left, according to the Bureau of Economic Analysis (BEA). Every dollar Americans sent to people in other countries was balanced by a dollar sent back to the United States: 64 cents for U.S. exports, 22 cents for payments to U.S. investors, 11 cents for investment in U.S. assets, and 3 cents on other transactions.

    There was no deficit.

    So why do critics complain about the trade deficit? The reason is that they only look at dollars spent on things like shoes, and not dollars spent on things like factories. Based on transactions in T-shirts, the U.S. has a deficit. Based on investment income, the U.S. has a surplus. Add up all the individual deficits and surpluses, and they balance out.

    Even if the U.S. did have a trade deficit, it wouldn’t matter, since there is no evidence that trade deficits are bad for the economy. All that really matters is protecting people from special-interest trade barriers that drive up prices and make Americans poorer.

    Posted in Economics [slideshow_deploy]

    Comments are closed.

    Comments are subject to approval and moderation. We remind everyone that The Heritage Foundation promotes a civil society where ideas and debate flourish. Please be respectful of each other and the subjects of any criticism. While we may not always agree on policy, we should all agree that being appropriately informed is everyone's intention visiting this site. Profanity, lewdness, personal attacks, and other forms of incivility will not be tolerated. Please keep your thoughts brief and avoid ALL CAPS. While we respect your first amendment rights, we are obligated to our readers to maintain these standards. Thanks for joining the conversation.

    Big Government Is NOT the Answer

    Your tax dollars are being spent on programs that we really don't need.

    I Agree I Disagree ×

    Get Heritage In Your Inbox — FREE!

    Heritage Foundation e-mails keep you updated on the ongoing policy battles in Washington and around the country.

    ×