A trade deficit means a country is losing.

A trade deficit is the amount by which a country’s imports of goods and services exceed its exports. TIME’s fact-check of the interview put the US figure for 2024 at $917.8 billion², using Bureau of Economic Analysis data, and stressed that it is not money lost: it shows that the country imports more than it exports.² That is well below the $2 trillion in the quote.

The same number can be written another way. The current account, of which the trade balance is the largest part, equals national saving minus investment.³ Then Federal Reserve Governor Ben Bernanke put it this way in 2005: the country’s current account deficit equals the excess of its investment over its saving⁴.⁴ A deficit therefore means the country is using other countries’ savings to pay for some of its own investment. Whether that is good or bad depends on what the money buys. The IMF says that, without diagnosing the causes, it is not meaningful to label a deficit as categorically good or bad. Read the IMF explainer (https://www.imf.org/en/publications/fandd/issues/series/back-to-basics/current-account-deficits).

The late 1990s show how a growing deficit can go with a strong economy. Bernanke notes that the US deficit rose as capital investment increased, spurred by perceived profit opportunities.⁴ Real US GDP grew 4.4 percent in 1997, 4.5 percent in 1998 and 4.8 percent in 1999⁵.⁵ This does not prove that the deficit caused the growth, and some deficits do arise from weak saving. The point is only that the same sign on the trade balance can come from very different situations.

What is not known: the research here does not give a size of deficit beyond which borrowing becomes a problem, and it cannot say how much of the loss of manufacturing jobs would have happened without trade, since technology also changed factories. The study looked only at Chinese import competition from 1990 to 2007, not at why a country runs a deficit; whether a deficit comes from low saving or a strong investment pull depends on the period and the country.¹ Read the study in the American Economic Review (https://www.aeaweb.org/articles?id=10.1257/aer.103.6.2121).