A clear-eyed view of United States trade and tariff policy, stripped of political rhetoric, reveals a complex economic engine fueled by trillions of dollars in global commerce. Steve Ballmer, the former CEO of Microsoft and founder of USAFacts, an organization dedicated to making government data accessible, emphasizes the importance of using these official numbers to form an independent perspective. His initiative provides the factual groundwork to dissect three key questions: What does the U.S. trade, with whom, and what rules govern this exchange? The scale of this activity is immense; in 2024, the U.S. imported $4.1 trillion and exported $3.2 trillion in goods and services, figures that are substantial when measured against a total national GDP of $29.2 trillion. These trade flows are not arbitrary but are shaped by federal policies that determine what is traded and how it is taxed.
The composition of U.S. trade is heavily weighted toward goods—tangible items—which made up over 80% of all imports in 2024, totaling $3.3 trillion. The leading categories are capital goods like machinery, consumer goods such as appliances, and industrial supplies, a category where petroleum is a major component. While the U.S. is a major oil producer, it also imports significant quantities, a reality explained by the economics of extraction location, shipping logistics, and varying types of crude oil. On the export side, the U.S. sold $2.1 trillion in goods, with industrial supplies (including petroleum), capital goods, and consumer goods leading the way. The trade in services, while smaller, is also significant. The U.S. imported $812 billion in services, led by travel (spending by Americans abroad), business consulting, and transport. Conversely, it exported $1.1 trillion in services, with business services, travel (spending by foreigners in the U.S.), and financial services as the top categories. America’s primary trading partner is now Mexico, followed by Canada and China, with these three, along with the UK, Germany, and Japan, accounting for nearly half of all U.S. trade.
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For nearly five decades, the U.S. has consistently run a trade deficit, meaning it buys more from other nations than it sells to them. This trend continued in 2024, with the deficit reaching $918 billion, a 17% increase from the prior year. The largest bilateral deficit was with China ($263 billion), followed by Mexico ($179 billion). At the same time, the U.S. maintained trade surpluses with 25 partners, including Australia, Brazil, and the United Kingdom. To manage these complex trade dynamics, governments employ three main tools: quotas, subsidies, and tariffs. Quotas set a hard limit on the quantity of certain imports, like sugar or steel, while subsidies, such as low-interest loans from the Export-Import Bank, aim to make domestic producers more competitive globally. Tariffs, a tax on imported goods, are perhaps the most debated tool. For instance, a 20% tariff on a $10 car part from Canada means the U.S. importer pays $12, with the U.S. government collecting the $2 tax.
The stated goal behind tariffs, as articulated by figures like President Trump, is to incentivize foreign companies to build factories in the U.S., thereby creating domestic jobs. However, economists point to a trade-off: such policies may lead to higher prices for American consumers. Tariffs also serve as a tool of foreign policy, with the U.S. imposing much higher rates on imports from countries like Russia and North Korea to deter trade. While historically a primary source of federal income, tariffs now represent a small fraction of government revenue. In 2024, they generated just $77 billion, or 1.6% of the $4.9 trillion in total federal revenue. Today, thanks to instruments like the United States-Mexico-Canada Agreement (USMCA), about 70% of all products enter the U.S. duty-free.
The precise impact of trade policy on jobs and prices remains a murky area as USAFacts highlights, federal data could be improved. While the U.S. International Trade Administration estimated that exports supported 10.2 million jobs in 2022, there is no equivalent government data on jobs supported by imports. Studies suggest that higher tariffs can protect some domestic jobs but also raise prices for consumers, while lower tariffs are linked to lower prices but can cause job losses in certain sectors while creating them in others. This presents a fundamental dilemma for policymakers: what is more important, lower consumer prices or more domestic jobs? Although the Constitution grants Congress the power to set tariffs, this authority has largely been delegated to the president since the early 20th century, allowing for unilateral action on trade for reasons ranging from national security to immigration policy. As the debate continues, it is up to informed citizens, armed with the facts, to decide their own stance on these critical issues.
