What Is the U.S. Trade Deficit?

A trade deficit means that imports are greater than exports from one country to another.

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Edited by other Updated Jun 16, 2026 Updated on June 16. Updated on June 16. A trade deficit means that a country imports more goods and services, by dollar value, than it exports. It can also refer to a specific imbalance between two trading partners. It’s the opposite of a trade surplus, which happens when exports exceed imports. » MORE: Keep up to date on the latest tariff news » MORE: The U.S. has run a trade deficit for decades. The deficit was $55.9 billion in April, down from a revised $56.6 billion in March, according to a report released on June 9 by the Bureau of Economic Analysis (BEA). In April, exports were up 2.6% while imports rose 2.0%. The U.S. continues to import more goods than it exports (a deficit), while exporting more services than it imports (a surplus). The overall deficit saw a large spike last spring as importers built up their inventories before President Trump’s tariffs went into effect, but has narrowed since.

Why Trump hates the deficit

President Donald Trump is a decades-long critic of the U.S. trade deficit, charging that it is the result of foreign trade policy that enables “cheating” or taking advantage of the U.S. by other countries. Thus, Trump wants to reverse the U.S. trade deficit by increasing tariffs, which are essentially a tax on imports from foreign countries. On April 2, 2025 — the day that Trump first announced widespread “reciprocal” tariffs on trade partners — the president declared that foreign trade and economic practices have created a national emergency. A fact sheet from the White House said “Large and persistent annual U.S. goods trade deficits have led to the hollowing out of our manufacturing base; resulted in a lack of incentive to increase advanced domestic manufacturing capacity; undermined critical supply chains; and rendered our defense-industrial base dependent on foreign adversaries.”

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The fact sheet also said that Trump’s tariffs would be in effect until the president “determines that the threat posed by the trade deficit” resolves. He says that tariffs will compel consumers to buy more domestic-made products and boost the manufacturing industry in the U.S. Trump’s tariff actions have sparked a trade war and while it will raise the cost of importing to the U.S., it’s also likely to increase prices by increasing costs for businesses that rely on imported goods and raw materials, who will then pass on higher costs to consumers. Retaliatory tariffs by trade partners could also negatively impact U.S. manufacturers that rely on exports.

Why economists are less concerned about the deficit

Many economists say that the president’s focus on reducing bilateral trade deficits — that is, taking a country-by-country approach to the deficit — demonstrates a fundamental misunderstanding of how today's complex global trade and supply chains function. In addition, economists say the trade deficit has little to do with the strength or state of the economy. For example, the deficit has been in place for decades, but that hasn’t hindered U.S. growth on an annual basis. A trade deficit simply means that the U.S. consumes more goods than they sell to all other countries. The U.S. has a consumption-based economy. Imported goods are often cheaper for U.S. consumers and, by diversifying the sources of goods, businesses can offer more variety of goods to U.S. consumers. Accessing more imported consumer goods doesn’t diminish the U.S.’s role as a producer and exporter. In fact, the U.S. remains the second-largest goods exporter in the world. The U.S. is also the largest services exporter in the world. The U.S. also runs a surplus of services, which include financial services, digital content, intellectual property, education and tourism and media licensing. The services surplus helps offset the goods deficit. Economists say that trade deficits aren’t necessarily harmful, so long as they is offset by foreign investment in the U.S. economy.

What is the trade balance and why does it matter?

The trade balance is the difference between the value of a country’s exports and imports. The U.S. runs a goods deficit and a surplus of services. From March to April, the goods deficit decreased by $2.4 billion to $83.7 billion and the services surplus decreased $1.7 billion to $27.8 billion. As mentioned above, the services surplus offsets some of the goods deficit and the remainder is the trade balance. Trump has imposed high tariffs on several of the nation’s key trading partners, including those with whom we run trade deficits. Retaliatory tariffs threaten to disrupt U.S. trade balances even further. If services are targeted for tariffs, it could hurt the U.S. services surplus, which is important to offsetting the U.S. trade deficit.

What does the trade deficit have to do with the national debt?

Trump has claimed that deficits with foreign countries have contributed directly to the national debt, but that’s not exactly correct. A trade deficit doesn’t directly affect the national debt, which is the total the government has borrowed from the American public, foreign governments and securities holders, but has not repaid. However, trade deficits can influence foreign investment, which can finance budget deficits. A trade deficit doesn’t carry the same economic implications as a budget deficit. The latter is a direct contributor to the national debt, which currently stands at $39.2 trillion, according to the U.S. Treasury Department. A budget deficit means the nation spends more than it brings in through taxes, so it borrows to make up the difference. Borrowing funds government operations and pays interest on the existing national debt. When the U.S. runs a trade deficit, it means dollars are flowing out of the U.S. and into foreign countries. In turn, foreign investors — like central banks or other governments — often reinvest money into the U.S. Treasury securities, which helps finance the budget deficit. And in turn, the budget deficit adds to the national debt. » MORE: Are we in a recession? » MORE: (Photo by Justin Sullivan/Getty News Images via Getty Images) Explore more on About the author Helhoski Anna Helhoski is a senior writer covering economic news and trends in consumer finance at NerdWallet. She is an on-air contributor and producer of Money News segments for NerdWallet's Smart Money podcast. She is also an authority on student loans. She joined NerdWallet in 2014. Her work has been syndicated in news outlets nationwide including The Associated Press, The New York Times, The Washington Post, The Los Angeles Times and USA Today. She previously covered local news in the New York metro area for the Daily Voice and New York state politics for The Legislative Gazette. She holds a bachelor's degree in journalism from Purchase College, State University of New York. Published in Are We in a Recession? Consumer Sentiment: Numbers Tick Up on Easing Gas Prices How Is Trump Handling the Economy? Fed Rate Holds Steady in June 2026 How Is the Economy Doing Right Now? By Anna Helhoski Trump Administration, Stymied by Courts, Outlines New Tariffs By Rick VanderKnyff How Could the DHS Shutdown Affect You? By Anna Helhoski U.S. Adds 172,000 Jobs in May, Beating Expectations Again By Anna Helhoski