It is a common refrain among economic populists, both Democrats and Republicans, that America’s trade deficit is a problem. Whether the supposed culprit is China, Canada, or Mexico, the argument goes that if the United States imports more than it exports, the economy is suffering. This perspective, however, misrepresents how value works in a free-market system and ignores the fundamental benefits of trade.
My family has a perpetual trade deficit with my grocery store, Lowe’s Foods — a Winston-Salem based supermarket chain. I buy from them weekly, but they never buy from me. Yet, I am not harmed. I exchange dollars for goods my family values, and Lowe’s reinvests the money into jobs and inventory. Both sides benefit — just like in international trade.
Trade between nations works in a similar way. The United States imports more from certain countries than it exports to them, but that does not mean we are losing. Instead, we receive products that Americans prefer at prices they are willing to pay. The dollars sent abroad do not vanish; they return in the form of foreign investment, purchases of American goods, or reinvestment in global supply chains that ultimately benefit the US economy.
The obsession with trade deficits comes from a misunderstanding of voluntary exchange. Value is always determined by the participants in any transaction. An American manufacturer that buys Chinese steel does so because it is the most cost-effective way to produce goods, which benefits consumers through lower prices. If tariffs or restrictions force businesses to buy domestically at higher prices, those costs ultimately fall on consumers and workers.
Critics on both the left and right may dismiss this argument as “globalist.” But that view misunderstands both globalism and the economic realities of a country as large and complex as the United States. The American economy is deeply interconnected with global supply chains, and attempting to sever those ties would create enormous disruptions. Even everyday products like root beer rely on imported ingredients, such as vanilla and cinnamon; while the automotive industry depends on rubber sourced from Southeast Asia to produce tires. The notion that the United States must produce everything domestically ignores the efficiency of open trade and some geographic realities of commodities. Specialization lowers costs and creates more economic opportunities for workers and consumers.
Historically, the United States has run trade deficits while maintaining economic growth, job creation, and rising living standards. In contrast, protectionist policies that attempt to reduce deficits by imposing tariffs or quotas have repeatedly led to economic stagnation and higher costs for American families. The Smoot-Hawley Tariff Act of 1930 worsened the Great Depression by triggering retaliatory tariffs and shrinking global trade.
Threatening tariffs can be an effective negotiation tool to secure better trade terms, but their actual implementation often backfires, causing economic disruption at home. President Donald Trump’s announcement of a 25% tariff on all steel and aluminum imports marks a significant escalation in US trade policy, signaling a hard shift toward protectionism. This move has raised concerns about potential retaliatory measures from key trading partners, which could disrupt global supply chains and increase costs for American consumers and industries reliant on these materials. Additionally, the tariffs may contribute to inflationary pressures within the United States economy, as higher import costs could lead to increased prices for a wide range of goods.
Populists love to blame foreign trade for America’s economic problems, yet they do little to address a far more alarming reality — the federal debt , now at $36.22 trillion, of which China owns $816 billion. While they push for protectionist policies to limit foreign influence, they ignore that America’s real vulnerability comes from reckless government spending, not international trade. The irony is that while these populists stoke fear over foreign ownership, they have no serious plan to shrink the debt that truly weakens the nation. Instead of isolating the United States with trade barriers, policymakers should recognize that a mutually beneficial trading relationship with foreign nations is far more preferable than an ever-growing indebted relationship. Open trade drives prosperity, while uncontrolled deficits only deepen reliance on creditors at home and abroad.
Some populists claim these policies are necessary for national security, but a strong economy — not trade restrictions — is what truly ensures America’s global strength. Overregulating trade to achieve full self-sufficiency would do more harm than good, increasing costs while reducing innovation and economic flexibility. Rather than treating trade deficits as a crisis, policymakers should focus on creating an environment where businesses and individuals can freely trade and invest. A strong economy is built on choice, innovation, and competition — not on government-mandated trade balances.
North Carolina’s robust export activity exemplifies the economic advantages of open trade. In 2023, the state achieved a record $42.2 billion in goods exports, marking a 44% increase from 2013. These exports accounted for 5.5% of North Carolina’s GDP and supported approximately 128,000 jobs in 2021. The manufacturing sector played a significant role, with chemical products leading at $15 billion, followed by machinery ($4.8 billion) and transportation equipment ($3.6 billion). Top export destinations included Canada, China, and Mexico, underscoring the state’s integration into the global economy.
Open trade fuels prosperity, not decline. The United States remains strong because it embraces trade, not because it restricts it. Those obsessed with trade deficits ignore the real crisis — $36.22 trillion in debt. If policymakers want to protect the economy, they should rein in spending, cut regulations, and foster innovation — not build protectionist walls that raise costs. The real threat isn’t trade — it’s Washington’s fiscal irresponsibility.
