The U.S. current account deficit is often framed as a sign of economic weakness—just under $1.13 trillion in 2024. Yet this figure largely reflects accounting conventions, not the true scale of American economic output. U.S. multinationals routinely shift both revenue and profits overseas—through low?priced imports to affiliates or licensing royalties tied to intellectual property. The combined total of these practices is estimated at anywhere from $500 billion to over $1 trillion annually. That means these hidden offshore transfers account for more than half, and in some years perhaps nearly the entire current account deficit.
Importantly, this isn’t a loss of wealth. These overseas earnings are still owned by U.S. firms and recorded on their balance sheets, underpinning their ability to raise capital, invest at home, and sustain shareholder returns. They may reduce U.S. tax revenue, but they do not impair the capital formation or financial strength of the companies involved.
Thus, the headline current account deficit masks something deeper: the U.S. economy’s global reach and financial muscle. What looks like a problem on the surface is, in large part, an invisible form of export and value creation that simply doesn’t fit neatly into traditional trade statistics. Correcting for profit and revenue shifting would probably shrink the reported deficit by more than half, offering a much truer portrait of America’s international economic position.
