A Personal Look at the Trade Deficit

When I first wrote an article about the U.S. trade deficit six years ago, I, like many others, focused on the issue at the national level. But that lens often feels distant, disconnected from the choices an individual makes in daily life. In this article, I shift the focus to the personal—the daily decisions that each of us make and how they collectively shape the national trade picture.

We often encounter the term “trade deficit” in discussions of international commerce, typically framed at the level of interacting nations. However, viewing it only through a national lens can obscure what is really going on.  To clarify matters, let us begin with a simplified national perspective and then shift to a more personal understanding of what a trade deficit truly represents in our own lives.

So, how is the trade deficit actually measured? The U.S. Census Bureau tracks the revenue generated from exports and the money spent on imports. The difference between these two numbers gives us the trade deficit, calculated as:

Trade Deficit = Exports – Imports

For 2024, the U.S. figures look like this:

Trade Deficit = $3,191.6 billion – $4,110 billion = – $918.4 billion

To some—Mr. Trump, for example—this negative figure signals danger. He sees it as proof that the U.S. is being exploited: unfair trade, lost jobs, economic vulnerability. His solution? Tariffs. On April 2, 2025, during his “Liberation Day” speech, he announced sweeping tariffs on imports from a range of countries, claiming they were necessary to protect American industries and restore fairness.

Six years ago, in a LinkedIn article I wrote on trade deficit, I argued that equating a trade deficit with economic loss or unfairness is not just an oversimplification—it is conceptually flawed. Many economists agree: trade deficits are not inherently harmful. In fact, they be used as a rough measure of economic strength of a nation’s consumers. When consumers have high incomes, thus greater purchasing power, they buy more—both domestically and internationally—which naturally increases imports and widens the trade deficit.

So, who’s right—Mr. Trump or the economists?

Actually, belief is beside the point. As President—especially one operating in a Congress where most members prioritize keeping their jobs over doing their jobs—Mr. Trump holds real power to define the national trade narrative and shape policy accordingly. This is precisely why we must go beyond the national perspective. Viewing trade deficits only from a societal level can lead to poor individual judgments. Instead, let us personalize the issue and explore what a trade deficit means in our own everyday lives.

Adopting the Personal Perspective

Like most people, I shop regularly at a local grocery store. Last year, I spent $17,000 there. If we were to apply the Census Bureau’s method—tracking revenues flowing in and out—my personal trade deficit with the store would look like this:

My Trade Deficit = Revenue from store to me – Revenue from me to store

= $0 – $17,000 = – $17,000

From the Census Bureau’s angle, the store gave me no money and took in $17,000 from me—a sizable trade deficit. Now, if we were to adopt Mr. Trump’s logic, I would have to assume the grocery store is exploiting me and that I should eliminate this "unfair" deficit by producing everything myself: milk, eggs, bread, steak, ice cream, and all the rest.

Clearly, this is absurd. No reasonable person believes that self-sufficiency in all things is practical—or even desirable. That $17,000 “deficit” in Census Bureau’s calculations is not a loss—it is the cost of essential goods and services that sustain my life. It grants me access to the broader societal and global pool of production and distribution of goods and services, which I could never replicate on my own. This is the central flaw in applying trade deficit logic to personal or national contexts without nuance. The number says nothing about what I receive in return. It is blind to the value of what flows into my life through that trade.

Income and Trade Deficits

Now consider Americans with lower incomes. Those earning between $15,000 and $29,000 annually spend about 14.1% of their income on groceries—a trade deficit of about $2,100 to $4,060 per year. My higher “grocery deficit” stems from my higher income and ability to purchase more.

This personal example maps directly onto the national level. The U.S. trade deficit is large because Americans, on average, have more purchasing power than people in many other countries. Far from being a sign of weakness, the trade deficit can roughly reflect the economic strength and consumption capacity of the American people.

Turning the Tables on Mr. Trump’s Logic

Let us take Mr. Trump’s idea to its logical conclusion: if every American sought to eliminate their grocery trade deficit by making everything themselves, grocery stores would shutter. Supply chains that produce and distribute goods and services would collapse. Society’s shared production and distribution networks would fall apart. Everyone becomes unemployed. In trying to fix the trade deficit, we would unravel the very fabric of modern civilization—and starve.

When viewed through a personal lens, the absurdity of using the trade deficit as a political or moral bludgeon becomes clear. And when the stock market plunges in reaction to misguided tariff policies, it is not just investor panic—it is a systemic warning of deeper dysfunction brought about by the societal leaders as they mismanage the societal affairs.

The Bigger Picture

So when we talk about the U.S. trade deficit as a $918.4 billion figure, we must recognize it as a narrative that is ripe for manipulation. But when we reinterpret it through the grocery store analogy and personalize it, the distortion promoted by societal leaders becomes evident.

We have become vulnerable to political narratives, like those by Mr. Trump, that distort the truth for their own ends, with no correction from legislative and judicial branches.

We have become vulnerable to political narratives, like those by Mr. Trump, that distort the truth for their own ends, with no correction from legislative and judicial branches.

Let me be clear: I am not placing all the blame on Mr. Trump. Every society occasionally elects a President who is a poor manager. When that happens, the American society, for four years, will be stuck with a President incapable of managing the societal affairs well. That reality has been recognized by the society’s founding fathers. That is why the U.S. Constitution establishes a system of checks and balances across three branches of government—to safeguard against dysfunction in any branch. When one becomes dysfunctional and starts to fail, the others step in to correct the situation. Yet today, all three branches appear to be faltering. Congress is filled with members more focused on reelection than governance—dedicated to preserving their jobs than doing their jobs. The Supreme Court seems increasingly driven by ideological bias rather than judicial balance that keeps the society balanced. That leaves the last line of defense: the people.

Can the people rise to reclaim a functioning government when all three branches are adrift? We’ll soon find out.