Does President Donald Trump’s allegation that the United States has a $1 trillion trade deficit with China hold true? Is the United States “losing $1.9 trillion on trade” annually? By no means.
In response to criticism of his tariffs, which have destroyed trillions of dollars in stock market value in a matter of days, the president on Sunday used both estimates.
We have a trillion-dollar trade deficit with China when you compare it to other nations. On board Air Force One, Trump stated, “We also need to address our trade deficit with China.”
Although there is a significant gap between the United States and China, it is not quite as great as the president claimed. According to government statistics, the difference with China increased marginally to $263 billion last year.
In 2024, the United States exported little under $200 billion to China, primarily in the form of services, chemicals, soybeans, and oil, while importing $462 billion worth of goods from China, including iPhones, TVs, clothing, and chemicals.
The countries with the largest trade deficits are the United States, Mexico, Vietnam, Germany, and Japan.
However, compared to a record $378 billion in 2018, the trade difference with China is 30% smaller now. That year, Trump levied significant tariffs on China, which the Biden administration mainly maintained.
Some Trump backers and opponents of China argue that in order to avoid tariffs, Chinese goods are being shipped to other nations, such Mexico or Vietnam, before arriving in the United States.
Although the precise amount of “transshipping” is unknown, experts agree that it does occur.
In contrast, the U.S. trade deficit decreased from a record $944 billion in 2022 to $918 billion in 2024.
Last year, a surplus in services like tourism and financial advice helped to partially offset a deficit in goods worth over a trillion dollars.
Since the late 1970s, the U.S. trade imbalance has been increasing. It did not post a surplus until 1975.
Historically, the distance with China had been little, and it only started to increase significantly in the 1990s.
After China was granted entry into the World Trade Organization and increased access to American markets, the deficit with China suddenly skyrocketed.
Trump is among many who blame China for the loss of manufacturing employment in the United States.
Between 2000 and 2007, manufacturing employment in the United States fell by 20%, from 17.3 million to 13.9 million.
Following the 2007–2009 recession, manufacturing employment in the United States fell to 11.5 million before beginning to rise again.
