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Why Does the U.S. Always Run a Trade Deficit?

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Abstract

The obvious answer to the question of why the United States runs a trade deficit is that its export sales have not kept up with its demand for imports. A less obvious answer is that the imbalance reflects a macroeconomic phenomenon. Using national accounting, one can show deficits are also due to a persistent shortfall in domestic saving that requires funds from abroad to finance domestic investment spending. Reducing the trade imbalance therefore requires both more exports relative to imports and a narrowing of the gap between saving and investment spending.

Suggested Citation

  • Thomas Klitgaard, 2025. "Why Does the U.S. Always Run a Trade Deficit?," Liberty Street Economics 20250520, Federal Reserve Bank of New York.
    • Handle: RePEc:fip:fednls:99992
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    More about this item

    Keywords

    trade; exports; imports; current account; deficit; balance; saving; investments spending; trade policy; international; macroeconomics;
    All these keywords.

    JEL classification:

    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance

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