Annual U.S. trade in good deficit with NATO is $121 billion

Donald Trump has certainly provoked a useful conversation about NATO's role and relevance – and, most importantly, the financial laggards within the alliance.

In a previous article, I showed that the United States is subsidizing all other NATO members in terms of military expenditures to the amount of about $180 billion per year.  But that is not the whole story.  The U.S. is also subsidizing the economies of almost all other NATO members.

In 2015, the U.S. ran a trade in goods deficit with all but five NATO members (Netherlands, Belgium, Turkey, Luxembourg, and Iceland), and the sum of all American trade balances with NATO members was a net deficit of $121 billion.

The largest trade deficit laggards in NATO – from an American perspective – are Germany ($74 billion per year), Italy ($28 billion per year), France ($18 billion per year), and Canada ($15 billion per year).

Coincidentally, Germany, Canada, and Italy are also three of the top four defense spending laggards in the alliance – meaning they are double-dipping at the trough of free-loading.  Coupled with its NATO defense expenditure deficit of $47 billion per year, Germany is being economically and militarily subsidized by the U.S. at a total of at least $120 billion per year.  Canada is at $41 billion per year, and Italy sits at $49 billion per year.

Thus, if we include both military spending and trade deficits, the United States is subsidizing the remainder of NATO by at least $300 billion each year and growing.

Donald Trump has certainly provoked a useful conversation about NATO's role and relevance – and, most importantly, the financial laggards within the alliance.

In a previous article, I showed that the United States is subsidizing all other NATO members in terms of military expenditures to the amount of about $180 billion per year.  But that is not the whole story.  The U.S. is also subsidizing the economies of almost all other NATO members.

In 2015, the U.S. ran a trade in goods deficit with all but five NATO members (Netherlands, Belgium, Turkey, Luxembourg, and Iceland), and the sum of all American trade balances with NATO members was a net deficit of $121 billion.

The largest trade deficit laggards in NATO – from an American perspective – are Germany ($74 billion per year), Italy ($28 billion per year), France ($18 billion per year), and Canada ($15 billion per year).

Coincidentally, Germany, Canada, and Italy are also three of the top four defense spending laggards in the alliance – meaning they are double-dipping at the trough of free-loading.  Coupled with its NATO defense expenditure deficit of $47 billion per year, Germany is being economically and militarily subsidized by the U.S. at a total of at least $120 billion per year.  Canada is at $41 billion per year, and Italy sits at $49 billion per year.

Thus, if we include both military spending and trade deficits, the United States is subsidizing the remainder of NATO by at least $300 billion each year and growing.