America’s $901 billion trade deficit is like ‘chronically high cholesterol,’ top economist says, and Trump’s 150-day tariffs are the wrong medicine

President Donald Trump has framed the U.S. trade deficit as a “national emergency” and a threat to Americans’ “way of life” throughout his second term. It was why he invoked the International Emergency Economic Powers Act in April 2025 to announce “Liberation Day” and reciprocal tariffs around most of the world (the Supreme Court didn’t agree that it was quite the emergency that he claimed).

As Trump scrambles to reassemble his signature policy, resuming his decades-long obsession with trade, some observers argue that he has conflated America’s trade problems with a very different kind of crisis.

The U.S. trade deficit—a measure of how much more value a country imports rather than exports—stood at around $901 billion last year, meaning that the U.S. is effectively spending much more than it is earning when it comes to trade. But it’s only a crisis if you can’t afford to pay, according to Gita Gopinath, former chief economist at the International Monetary Fund.

“U.S. trade deficits are large and need to be brought down. Reducing U.S. fiscal deficits is important. At the same time, there is no doubt in the U.S. ability to pay the world and therefore no crisis,” Gopinath, now a Harvard professor, wrote in ...