The American Offset Model
We all know how massive the American national debt is: it currently sits at just under $40 trillion, roughly 125% of our current GDP.[1] However, we often fail to consider how that deficit was created over the years, nor why the situation never seems as dire as our debt-to-GDP ratio suggests. This is largely by design, and I call it the American offset model.
As per my own framing, the American offset model involves pooling U.S. debt reserves across the Global South and “offsetting” them through trade, creating the illusion of win-win scenarios domestically and internationally. Of these “offsets,” two that seem to never get talked about are mining and carbon.
The mechanism is not mysterious. We run persistent trade deficits, which send dollars abroad; a great deal of that money comes back as demand for Treasury debt, which lets us borrow more cheaply than our fiscal position would otherwise permit.[2] Cheap imports hold down domestic prices, which in turn hold down interest rates, and make the debt easier to carry. What makes this an offset rather than ordinary trade is where the costs land. The benefit is booked at home; the cost is located somewhere with standards we would never accept for ourselves. That single pattern is what the carbon market and the minerals trade have in common, and it is why I treat them as two versions of the same thing.
I’m going to briefly go through each aforementioned offset that doesn’t get talked about, along with what each one means for the immediate and long-term future of the United States.
The Carbon Offset. Western companies use credits bought across forests in the Global South to claim net-zero.
I’ve written books about this offset, which I feel never gets talked about. One such book is “Climate Mitigation in the Land Sector of the Global South: Making It Work for People and Planet”[3], in which I discuss much of the information below. In essence, Western corporations are offshoring their carbon losses rather than actually creating positive environmental impacts. All the biggest corporations engage in these practices: Disney, Nestle, Boeing, Shell, Spotify, etc. Standard-setting within these carbon markets is nearly monopolized, with DC-based firm Verra certifying the large majority of all voluntary market transactions — estimates of its share range from roughly 63% to 80% depending on how you count.[4] The bridges between the public and private sectors within this market are formed almost exclusively by independent, conservation NGOs (also called BINGOs), and there is only so much they can do. The bottom line is that an industry that should be advancing environmental conservation and sustainability is instead disenfranchising populations across the Global South for the sake of corporate interests.
The evidence on whether any of this actually works is worse than most people assume. A peer-reviewed study in Science evaluated 26 voluntary REDD+ projects across six countries and found that most of them did not meaningfully slow deforestation at all, and the few that did delivered far less than they claimed.[5] On the subset of projects with enough public baseline data to analyze, roughly 94% of the credits issued did not correspond to real emissions reductions.[6] In other words, only about one credit in sixteen was doing the job it was sold as doing. Verra has contested the methodology behind that finding, which is worth noting — though it announced an overhaul of its own REDD+ standards in the same breath.[7]
The voluntary carbon market is growing exponentially — according to estimates, it could explode from well under $1 billion in annual transactions at the start of this decade to $50 billion by 2030.[8] However, it will not lead to significant improvement in carbon emissions unless the paradigms are changed. Under the current system, most of the money to be made is in trading and speculation rather than actual projects.
Not only are standards poorly created, but they are also poorly enforced. Western credit agreements in the Global South often take place in countries with deliberately weak standards — such as the DRC and Cambodia — and without the consent of the people indigenous to the land that is being bought. This leads not only to the commercialization of often culturally sacred lands and the complete alienation of generations, but also wasted money on projects by government programs such as USAID. I wrote in detail in my book “Redeeming REDD”[9] about how this problem will not be easy to fix; we need stricter standards that frame projects in the Global South as conservation, not extraction, and this can only be achieved through public interests that also incentivize corporate cooperation.
The Mining Offset. The United States imports over half of its critical minerals, with roughly a dozen being completely import-reliant.[10]
Copper plays a significant role in this offset. In 2025, the Trump administration declared copper imports a national security threat under Section 232 and imposed a 50% tariff on semi-finished copper products and copper-intensive derivatives,[11] a shocking decision given copper’s importance in powering technology. The goal of these moves was to reduce dependency on copper imports, in theory attempting to centralize control over one of its critical minerals.
The trouble is that the underlying dependency was never something a tariff could fix. Copper is what moves generated power onto the grid, and America’s grid is old and needs upgrading. We have been roughly 40 to 45% import-reliant on refined copper in every year since 2021, with an estimated 57% in 2025, and Chile is the leading supplier.[12] Domestic mining capacity is not the binding constraint — the United States has copper in the ground and ships roughly a third of what it digs up back out as unfinished ore and concentrate, because there is nowhere here to process it. The bottleneck is the midstream: smelting and refining. A tariff does not build a smelter. So, the practical effect of copper protectionism is not independence; it is higher costs on wire, cable, pipe, and connectors, passed through to utilities, contractors, and eventually households, at exactly the moment when the coal fleet that still supplies a meaningful share of American electricity is aging out. The country has retired approximately 100 gigawatts of coal-fired capacity since 2015, and most of the plants left standing were built in the 1970s and 1980s.[13] Replacing and modernizing that infrastructure runs through copper we do not finish.
What makes this a genuine offset story rather than a trade story is where the copper is increasingly coming from. Before and since the tariff declaration, the United States has been moving to source a rapidly increasing share of copper from the Democratic Republic of the Congo — a country with a recent history of armed conflict, notoriously low safety standards, and documented child labor issues. In early 2026, the DRC raised its planned copper exports to the U.S. fivefold, to 500,000 metric tons through its state miner Gécamines, with backing from the U.S. International Development Finance Corporation.[14] Congolese civil society groups have already raised the alarm that the contracts behind that surge have had almost no public scrutiny.
It matters that the objection comes from inside the country. This is not a story of the Global South being acted upon while Washington decides everything — Gécamines is a state miner, and the expansion was Kinshasa’s decision as much as anyone’s. Elites on both ends do well out of these arrangements. What they have in common is that the people who actually absorb the cost in mining towns and in the forests the credits are drawn from are the ones least consulted at either end. We are not reducing dependency. We are relocating it, and the cheapness of the arrangement is the standards gap itself.
The obvious objection is that import dependency is ordinary. Every advanced economy buys what it cannot make cheaply, and comparative advantage is not a scandal. That is true, and it is not what I am arguing against. The problem is not that we buy copper abroad. It is that a meaningful share of the price advantage comes from safety, environmental, and labor practices that would be illegal here. That is not comparative advantage; it is regulatory arbitrage — and unlike smelting capacity, it is something we could change without building anything.
This issue of unalterable dependence on import reliance extends to other critical minerals. Rhenium, an essential component of the superalloys in F-35 turbine blades, is a good example: we produce some domestically as a byproduct of molybdenum roasting at copper-molybdenum operations, but our net import reliance still runs around 75%, with Chile supplying the largest share and Canada, Germany, Poland, and Kazakhstan making up most of the rest.[15] Rhenium has no substitutes at all, which makes it a cleaner illustration than copper of how narrow some of these dependencies are.
The Hypocrisy of Offset Models. Offset models not only tolerate unequal standards between perpetrating and receiving countries; they inherently rely upon them.
No bigger example stands out specifically in the case of the United States than the “Chimerica” pairing that peaked in the 2000s. China, simultaneously as the primary recipient of American offshore activity and largest supplier of its imports, fostered a level of interdependence that, on one widely held reading, helped set the conditions for the 2008 financial crisis — cheap Chinese savings suppressing U.S. interest rates and inflating the credit bubble. That reading is contested, and I do not want to lean on it harder than the evidence allows.[16] What is not contested is the shape of the arrangement: one side consumed, the other side supplied and financed, and both governments preferred not to look too closely at what the imbalance was building.
As we approach our next economic downturn, the response has been to cut off foreign aid and dissolve USAID entirely, with its remaining functions folded into the State Department.[17] This is worth sitting with, because it is often presented as a break from the old arrangement when it is nothing of the sort. Foreign aid was the one leg of the relationship that moved money outward on terms other than extraction. The carbon and mineral flows — the parts that actually depend on weak standards abroad — were untouched by the cuts, and in the case of minerals, actively expanded. Removing the aid while keeping the offsets does not counter the American offset model. It strips out the only piece that was not transactional and leaves the rest running.
I do not see the choices the United States has made recently as wise, especially considering how strongly we still depend on Chinese rare earth minerals — China controls roughly 90% of global rare earth refining and separation,[18] and has already demonstrated a willingness to use it, imposing sweeping export controls in October 2025 before suspending them a month later.[19] Beyond just China, the American offset model relies heavily on the assumption that no interruptions will be caused by anti-American regimes, which I view as unsustainable. The Iran war and the disruption of traffic through the Strait of Hormuz have been an expensive reminder of how quickly that assumption fails.[20]
So, what’s the solution? It goes without saying that the American offset model has thus far been incredibly difficult to move away from. The price advantages granted to the American consumer as a result have made it so that equalizing standards between importer and exporter countries will not only require cooperation from corporations, but also everyday people.
To address this, I favor a balanced approach that walks the line between idealism and reality. We need domestic mining and, more to the point, the midstream capacity to finish what we already dig up; we need true environmentalism from American corporations for economic advancement; and we cannot outsource harmful conditions to the Global South simply because we do not want to make the sacrifices required to achieve carbon neutrality. We need standards, but also economic diversification; we need morals internationally, but also stability domestically.
Most of all, we need an approach that encourages compromise. A useful starting point would be a social contract that frames our objectives plainly, identifies what achieving them will take, and says who pays — something American citizens could actually buy into.
U.S. Department of the Treasury, Debt to the Penny. Gross federal debt stood at approximately $39.9 trillion in August 2026. Debt held by the public crossed 100% of GDP in early 2026 (Congressional Budget Office, The Budget and Economic Outlook: 2026 to 2036). ↑
Often discussed as the dollar’s “exorbitant privilege” — the capacity of the reserve-currency issuer to finance deficits on terms unavailable to other borrowers. Foreign holdings of U.S. Treasury securities stood at $9.37 trillion in May 2026, up from $9.02 trillion a year earlier (U.S. Department of the Treasury, Treasury International Capital system, Major Foreign Holders table). Roughly $3.85 trillion of that is held by foreign official institutions; the balance is private, so the channel runs less through central bank reserve accumulation than the classic account implies. ↑
Routledge, 2026. ↑
Estimates vary by what is measured. Verra accounted for roughly 63% of voluntary carbon market credit retirements in 2024, and an estimated 70–80% of cumulative credits issued to date under the Verified Carbon Standard. ↑
Thales A. P. West, Sven Wunder, Erin O. Sills, Jan Börner, Sami W. Rifai, Alexandra N. Neidermeier, Gabriel Frey, and Andreas Kontoleon, “Action Needed to Make Carbon Offsets from Forest Conservation Work for Climate Change Mitigation,” Science 381, no. 6660 (2023): 873–877. ↑
The 94% figure applies to the 18 of 26 projects with sufficient publicly available baseline data. See also Julia P. G. Jones and Simon L. Lewis, “Forest Carbon Offsets Are Failing,” Science 381, no. 6660 (2023): 830–831. An earlier preprint of the West et al. study underpinned the January 2023 investigation by The Guardian, Die Zeit, and SourceMaterial. ↑
Verra objected to the study’s use of synthetic control methods for constructing counterfactual deforestation baselines. It has since revised its REDD+ methodologies. ↑
McKinsey & Company, “Putting Carbon Markets to Work on the Path to Net Zero” (2021), which valued voluntary carbon markets at roughly $300 million in 2020; Taskforce on Scaling Voluntary Carbon Markets, Final Report (January 2021). The $50 billion figure is a high-end 2030 scenario, not a forecast; the reported range runs from $5 billion upward. ↑
Routledge, 2013. ↑
U.S. Geological Survey, Mineral Commodity Summaries 2026. Of the 58 nonfuel commodities on the 2025 List of Critical Minerals, the United States was 100% net import reliant for 13, with an additional 20 above 50% of apparent consumption. China is the leading source for 14 of those 33. ↑
Presidential Proclamation of July 30, 2025, effective August 1, 2025. See Congressional Research Service, “Section 232 National Security Tariffs on Copper Imports,” IN12614. The Bureau of Industry and Security recommended a 30% tariff; the proclamation imposed 50%. Copper ores, concentrates, cathodes, and scrap were exempted, so the pass-through runs through semi-finished and derivative products rather than raw metal. Effective April 6, 2026, the tariff was extended to the full value of covered products rather than their copper content alone. ↑
U.S. Geological Survey, Mineral Commodity Summaries 2026. Net import reliance for refined copper as a share of apparent consumption ran 44%, 41%, 42%, and 45% from 2021 through 2024, with 57% estimated for 2025. The 2025 figure is inflated by importers front-running the Section 232 tariffs; the persistence of a 40%-plus shortfall matters more than any single year. Domestic refinery output was roughly 850 thousand metric tons in 2025 against apparent consumption near 2,200 thousand. ↑
U.S. Energy Information Administration, Preliminary Monthly Electric Generator Inventory. Retirements peaked at 14.9 GW in 2015 and averaged roughly 11 GW annually through 2020. The pace has since slowed sharply — 2.6 GW in 2025, the lowest since 2010 — as data-center demand growth extended the lives of plants previously scheduled to close. ↑
Announced April 2026 through a Gécamines–Mercuria Energy Group joint venture with U.S. International Development Finance Corporation backing, a fivefold increase over the 100,000-tonne commitment made in January 2026. ↑
U.S. Geological Survey, Mineral Commodity Summaries 2026: U.S. net import reliance for rhenium reached 75% of apparent consumption in 2025, up from 68% in 2024. Roughly 80% of world rhenium goes into high-temperature superalloys. Rhenium was returned to the critical minerals list in 2025, and the National Defense Stockpile holds none. ↑
The term was coined by Niall Ferguson and Moritz Schularick in 2007. The channel described here is close to Ben Bernanke’s “global savings glut” thesis (2005). Other accounts assign primary causation to domestic financial deregulation, securitization, and monetary policy rather than to the external imbalance. ↑
The State Department notified Congress in 2025 of its intent to absorb USAID functions; the reorganization took effect July 1, 2025. See KFF, “U.S. Foreign Aid Freeze and Dissolution of USAID: Timeline of Events.” ↑
International Energy Agency: China accounted for 61% of global mined rare earth supply and 91% of global refining and processing capacity for key rare earths in 2024, and 94% of sintered permanent magnet production. ↑
Announced October 2025 and suspended for one year in November 2025. China tightened export controls on dual-use goods destined for Japan in January 2026. ↑
The International Energy Agency characterized the resulting disruption as the largest in the history of the global oil market. U.S. gasoline prices rose more than $1 per gallon in the first eight weeks of the conflict. ↑