Apparently, in Trumpland, trade in services simply does not count, even though it’s a big part of U.S. trade. In fact, the World Trade Organizationsays that trade in services is the “most dynamic segment in world trade, growing more quickly than trade in goods.” The United States is the dominant player, a fact highlighted by the 2018 annual report of the Council of Economic Advisers, released in February and signed by the president: “Focusing only on the trade in goods alone ignores the United States’ comparative advantage in services.”
Trade in services includes, among other things, telecommunications, accounting and legal services, and tourism. It’s not perhaps as solid and shiny as steel, but it’s a real export. In 2016, the U.S. services surplus was almost $25 billion, resulting in an overall trade surplus with Canada of $12.5 billion, according to the U.S. Trade Representative. (The Commerce Department’s Bureau of Economic Analysis says the surplus was $7.7 billion in 2016 and nearly $2.8 billion in 2017.)
The 2018 CEA report even includes a chart showing Canada has a trade surplus.
The president frequently suggests the United States is losing money with these deficits, but countries do not “lose” money on trade deficits. A trade deficit simply means that people in one country are buying more goods from another country than people in the second country are buying from the first.
Americans want to buy these products from overseas, either because of quality or price. If Trump sparked a trade war and tariffs were increased on Canadian goods, then it would raise the cost of those products to Americans. Perhaps that would reduce American purchases of those goods, and thus reduce the trade deficit, but that would not mean the United States would “gain” money that had been lost. Meanwhile, trade deficits are also affected by macroeconomic factors, such as the relative strength of currencies, economic growth rates, and savings and investment rates.
The White House did not respond to a request to comment on why Trump consistently says the United States runs a trade deficit with Canada when official government figures show a surplus. According toour database of Trump’s false and misleading claims, he has made this false claim about Canada at least 10 times.
More: Analysis | Here’s why Trump keeps saying — wrongly — the U.S. has a trade deficit with Canada
Trump is conveniently ignoring trade in services - which gives the U.S. an overall trade "surplus" with Canada.
Trade in services includes, among other things, telecommunications, accounting and legal services, and tourism. It’s not perhaps as solid and shiny as steel, but it’s a real export. In 2016, the U.S. services surplus was almost $25 billion, resulting in an overall trade surplus with Canada of $12.5 billion, according to the U.S. Trade Representative. (The Commerce Department’s Bureau of Economic Analysis says the surplus was $7.7 billion in 2016 and nearly $2.8 billion in 2017.)
The 2018 CEA report even includes a chart showing Canada has a trade surplus.
The president frequently suggests the United States is losing money with these deficits, but countries do not “lose” money on trade deficits. A trade deficit simply means that people in one country are buying more goods from another country than people in the second country are buying from the first.
Americans want to buy these products from overseas, either because of quality or price. If Trump sparked a trade war and tariffs were increased on Canadian goods, then it would raise the cost of those products to Americans. Perhaps that would reduce American purchases of those goods, and thus reduce the trade deficit, but that would not mean the United States would “gain” money that had been lost. Meanwhile, trade deficits are also affected by macroeconomic factors, such as the relative strength of currencies, economic growth rates, and savings and investment rates.
The White House did not respond to a request to comment on why Trump consistently says the United States runs a trade deficit with Canada when official government figures show a surplus. According toour database of Trump’s false and misleading claims, he has made this false claim about Canada at least 10 times.
More: Analysis | Here’s why Trump keeps saying — wrongly — the U.S. has a trade deficit with Canada
Trump is conveniently ignoring trade in services - which gives the U.S. an overall trade "surplus" with Canada.
