Source: ITR Economics Now part of CROWE – May 2025
The US trade deficit has been stable at around -4.0% of GDP for more than a decade. Could the US economy face risks by becoming more manufacturing heavy?
The US is running a trade deficit, a clear fact that has sparked a lot of the current tariff situation. Currently, the annual US Trade Balance for Goods is -$1,306.6 billion and US Trade Balance for Goods and Services is -$1,035.0 billion. Those seem like overwhelming numbers, so we need to put them in context.
The current US Trade Balance of Goods with the World as a Percent of US GDP is -4.0%. That number has vacillated around -4.0% since 2010. Focusing on just the raw trade balance ignores the point that there is relative stability in the deficit, and this has been a normal trend for over a decade. Focus on that thought for a moment. The Trade Balance for Goods as a percent of our US GDP has held steady for roughly 15 years.
Think back to the last 15 years. How has the economy performed? How has your business performed?
Looking at the below chart, we see the Trade Balance in dark blue, and the dark blue line is falling. That is the Trade Balance causing such concern. The light blue line is the US GDP trend. GDP has grown and thrived with little regard for what the Trade Balance has done for the past 60+ years.