US Trade Balance
Exports minus imports as percentage of GDP
“The US went from trade surplus to permanent deficit after abandoning the gold standard in 1971.”
The trade deficit emerged in the mid-1970s and widened dramatically after 2000. The shift reflects the Triffin dilemma (reserve currency must run deficits), deindustrialization, and globalization — not simply the end of gold convertibility.
Perspectives
← Swipe between perspectives →
Structural forces, not just monetary policy, drove the shift
The trade deficit reflects the Triffin dilemma, globalization, deindustrialization, and the shift to a service economy.
This is one of the stronger charts for the 1971 thesis — the timing is real. But the causes are multifactorial: reserve currency status, NAFTA, China's WTO entry, and comparative advantage shifts all played major roles. Other fiat-currency nations (Japan, Germany) run persistent surpluses, proving fiat money doesn't inherently cause deficits.
Causal Factors
Triffin dilemma (reserve currency)
30%As the world's reserve currency, the US must supply dollars globally, which requires running trade deficits. This is structural, not a policy failure.
Globalization & offshoring
25%US manufacturing shifted to lower-cost countries, especially China after its WTO accession in 2001. The 'China shock' alone eliminated 2-2.4 million US jobs.
Strong dollar attracting imports
20%Foreign demand for US assets (bonds, stocks) keeps the dollar strong, making imports cheap and exports expensive.
Shift to service economy
15%The US comparative advantage shifted from manufacturing to services (tech, finance, entertainment), which are harder to export.
Energy imports (declining)
10%Oil imports were a major component of the deficit for decades, though US shale production has reduced this significantly since 2010.
Data Source
Key Events
Nixon Shock
Dollar decoupled from gold, exchange rates begin floating
Plaza Accord
G5 nations agree to weaken the dollar to reduce US trade deficit
NAFTA
North American Free Trade Agreement takes effect
China joins WTO
China's WTO accession accelerates manufacturing offshoring
Peak deficit
Trade deficit reaches -5.5% of GDP, the widest in US history