THE AMERICAN trade deficit last year was $26.7 billion - four times the previous record, set in 1972. What does the Carter administration propose to do about it? For the present, an astounding change in the world's attitudes toward money and trade since the beginning of this decade. The emergence of that earlier, much smaller trade deficit was one of the pressures that impelled the Nixon administration in 1971 into a series of radical remedies - the wage and price freeze, the illegal surtax on imports, the forced devaluation of the dollar. The results of that strategy would hardly invite any President to repeat it today. But the question doesn't even arise, because the world's montary system has been transformed since 1971.

In those days - it seems a very long time ago - governments fixed their currency exchange rates deliberately, as acts of policy. Today the rates float, which is to say that they rise and fall mainly with the demands of the international money markets. To be sure, governments fiddle with the rates and try, with varying degrees of success, to influence them. But in the last analysis no country, not even the United States, can fully control the rates at which its money is traded around the world.

Now back to the huge U.S. trade deficit: All the best people, including Treasury Secretary W. Michael Blumenthal, agree that it is unsustainable. But the main reasons for this deficit - huge U.S. oil imports and slack growth of foreign economies take our exports - are not likely to change easily or soon. How does the administration reconcile those facts?

There are two possibilities. One is to slow down the economy so that Americans buy less abroad - especially oil. That means high unemployment and all the other unhappy social effects of stagnation. The alternative is to keep the American economy growing steadily and let the exchange rates take the strain. That means letting the dollar continue to depreciate against the currencies of countries running surpluses - most notably, Japan and West Germany. American policy is to do just that. Mr. Carter's annual economic message two weeks ago made his choice rather clear; the subsequent report of his Council of Economic Advisers makes it altogether explicit.

The Japanese and the Europeans have received the message with dismay. A declining American dollar means that American exports will be more competitive in their markets, while their exports are less competitive here. The Germans in particular accuse the United States of trying to force its friends to help carry the costs of its tremendous, and growing, oil imports. That is, in a sense, correct. But it is also correct that any sudden and drastic cut in U.S. oil consumption would push the country into a recession aggravating all the present economic troubles in Europe as well as here. What the Europeans would like is a strenous and sustained American effort to support the exchange rate by buying dollars heavily. That is, in fact, what the government began doing a prohibitively expensive game to play continuously.

There's always the sinister possibility that the trade deficit will become, as you might say, self-correcting. It exerts a drag on the economy. If the growth rate falls, industrial production will decline and imports will accompany it downward. It is clearly better to suffer big trade deficits for the present and to let the dollar depreciate if necessary - even though the process promises to create recurring tensions between the United States and its allies.