🧵🇺🇸 THE $1.2 TRILLION DRAIN – WHICH COUNTRIES ARE FUELING AMERICA'S MASSIVE TRADE DEFICIT?
America just hit a record $1.2 TRILLION trade deficit in 2024.
January's preliminary numbers show a staggering $153 billion monthly deficit as businesses rush imports ahead of tariffs.
Let's break down who's winning and losing in this economic battleground...
America just hit a record $1.2 TRILLION trade deficit in 2024.
January's preliminary numbers show a staggering $153 billion monthly deficit as businesses rush imports ahead of tariffs.
Let's break down who's winning and losing in this economic battleground...
1/ FREEFALL: America's monthly trade deficit has been deteriorating for decades, but January 2025 marks a truly alarming milestone - hitting $153 billion in a single month.
Even during the 2008 financial crisis, our deficit never approached these levels.
This chart shows exactly why trade has become Trump's top economic priority.
Even during the 2008 financial crisis, our deficit never approached these levels.
This chart shows exactly why trade has become Trump's top economic priority.
2/ ASIA DOMINANCE: China alone accounts for $295B of our trade deficit - the largest of any country. But look at Vietnam: a $123B deficit that's exploded as companies shifted production from China.
The combined deficit with our top 5 Asian partners exceeds $620B - over half our total deficit.
The combined deficit with our top 5 Asian partners exceeds $620B - over half our total deficit.
3/ NEIGHBORS: Mexico has overtaken China as America's largest import source, with our deficit reaching $172B - nearly 2.5x what it was during Trump's first term.
Canada adds another $63B deficit, driven by oil and vehicle imports.
No wonder Trump's targeting both with new tariffs.
Canada adds another $63B deficit, driven by oil and vehicle imports.
No wonder Trump's targeting both with new tariffs.
4/ EUROPE'S IMBALANCE: While we enjoy a $56B surplus with the Netherlands (our largest globally) and $12B with the UK, these bright spots are overwhelmed by deficits elsewhere.
Ireland ($87B) and Germany ($85B) lead the pack, with pharmaceuticals and vehicles driving the imbalance.
Ireland ($87B) and Germany ($85B) lead the pack, with pharmaceuticals and vehicles driving the imbalance.
5/ EMERGING PLAYERS: India's deficit has doubled since Trump's first term to $46B, as companies like Apple shift production from China.
With India's average import tariff at 14.3% versus America's 2.7%, expect this relationship to come under scrutiny in upcoming trade negotiations.
With India's average import tariff at 14.3% versus America's 2.7%, expect this relationship to come under scrutiny in upcoming trade negotiations.
6/ PRODUCT BREAKDOWN: Three categories dominate our deficit: machinery ($269B), electronics ($264B), and vehicles ($242B).
Our only significant surpluses?
Aircraft ($99B) and energy products ($79B).
This shows exactly where American manufacturing has hollowed out.
Our only significant surpluses?
Aircraft ($99B) and energy products ($79B).
This shows exactly where American manufacturing has hollowed out.
7/ THE CHALLENGE AHEAD: Trump's "reciprocal tariffs" strategy aims to address these imbalances by matching other countries' trade barriers.
But January's record $153B deficit - as importers rushed goods ahead of tariffs - shows just how deeply entrenched these trade patterns have become.
Will tariffs rebalance global trade, or will they simply rearrange our deficits with different countries?
The economic chess match has just begun.
Source: WSJ
But January's record $153B deficit - as importers rushed goods ahead of tariffs - shows just how deeply entrenched these trade patterns have become.
Will tariffs rebalance global trade, or will they simply rearrange our deficits with different countries?
The economic chess match has just begun.
Source: WSJ
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