A lot of what we think we know about America’s role in the global economy … may not be true.
For instance, there’s a common notion that much of America’s national debt is held by China. The reality? Not so much.
In truth, most of the federal government’s debt (about 70%) is held by Americans.i China only holds a little over 4% of our debt — and isn’t even the leading country on that front.ii
The country that holds the most American debt: Japan.iii (Though even they only have about 5.5%.)
Another mistaken belief: America is dependent on Middle Eastern oil. In fact, the country from which America imports by far the most petroleum is Canada.iv
Our neighbors to the north provided 51% of our petroleum imports in 2021. Saudi Arabia, by contrast, provided 3%.
Perhaps the most confusing economic issue: trade deficits.
A trade deficit occurs when a country imports more goods than it exports. There’s a common belief that if the U.S. is running trade deficits, we must be getting poorer.
In reality, however, the U.S. has run trade deficits through the majority of its history.v
And trade deficits are often higher when the economy is strong.vi
As a result, most economists say trade deficits don’t tell us much about the strength of the economy.vii
WHAT YOU NEED TO KNOW:
- China only holds a little over 4% of America’s national debt.
- The United States imports vastly more petroleum from Canada than it does from Saudi Arabia.
- Most economists think trade deficits don’t actually tell us much about the health of the economy.
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