Trump’s Trade Deficit Mission: The Unbalanced Balance

An unbalanced balance. With this in mind, Donald Trump has suddenly placed the trade deficit at the center of political, economic and commercial debates. Even before he was elected to office, the U.S. president embarked on a titanic mission: to reduce the imbalance between what the United States buys, i.e. its imports, and what it sells to other countries, i.e. its exports.

“Having a trade deficit is not negative per se, since it implies that there is a division of labor throughout the world, which is the basis of current economic progress,“ explains Federico Steinberg, senior researcher at the Elcano Royal Institute. The U.S. economy, as is the case with the main European economies, has developed on the basis of a greater specialization in services, leaving manufacturing and industry mainly to other countries, where economies such as China’s have proliferated.

This has meant that, over time, the United States has accumulated an imbalance between its purchases and sales within the international trade panorama. In the case of China, for example, trade in goods between the two powers reached $585 billion in 2024. Of this total, however, the United States imported much more, 440 billion, than it exported, 145 billion, resulting in a negative balance of almost 300 billion for the Yankee power.

The dollar’s rise as the reserve currency benefits and hurts the United States at the same time. Having the U.S. currency as a benchmark attracts foreign capital to buy debt, allowing the country to live above its real income. Conversely, these investments also keep the dollar overvalued, and make its costs higher.

The IMF has estimated an impact of up to one point on global growth from tariffs

For Steinberg, the US president’s reasoning has two main flaws. “The problem is thatTrump is obsessed with the bilateral deficit of trade in goods, and currently, it is neither bilateral, because the balance is not only negative for the United States, nor does it depend solely on manufacturing, since services have an important weight in world trade,“ explains the researcher.

This reality can be seen, for example, in the case of the United States and Europe, which accumulate a trade exchange of around 1.68 trillion euros. Although the American power imported more goods from the EU (€532.3 billion), the EU, for its part, imported more services from the United States (€482.5 billion), according to data from the Council of the EU.

To reverse this situation, the president, at the head of the main consumer market worldwide, has found in tariffs his main ally. “At the moment there is no definitive agreement on new tariffs, although everything points to a minimum of 10% across the board worldwide,“ Steinberg reflects. As little as this may seem in the current context, where the levy on Chinese goods, for example, has reached over 100%, it is a considerable increase from the 2% to 3% tariff that much of international trade has been subject to so far. “It’s going to be a global macroeconomic shock,“ warns the expert.

The International Monetary Fund (IMF) has so far put the impact of tariffs at one point of the global growth forecast for 2025, an estimate that, according to the researcher, falls short of reality. “Those who have weight in decisions in the White House are not economists, but political strategists, so the truth ends up mattering little in the story,“ concludes Steinberg.