President Donald Trump is mad online about America’s trade deficit with Canada even though the United States does not have a trade deficit with Canada.
According to the US Trade Representative’s official statistics, the United States runs a $12 billion trade deficit in goods with Canada. That is more than offset by our $24 billion trade surplus in services, leading to a $12 billion total trade surplus. Running an overall trade deficit is not really a bad thing, and looking at particular bilateral trade balances is totally irrelevant.
The data says we have a surplus with Canada. But Trump says otherwise!
The context for this controversy is reports that last night, Trump admitted to making things up about the US-Canada trade relationship, something he now seems to be denying he did.
Speaking to donors in Missouri, Trump explained that he got into an argument with Prime Minister Justin Trudeau about trade figures even though he didn’t actually know what the real numbers are. Via the Washington Post:
The Washington Post got audio of these remarks and wrote them up with the headline “In fundraising speech, Trump says he made up trade claim in meeting with Justin Trudeau.”
This seems to have angered Trump because the argument he made in the remarks was that even though he was talking out of his ass, later analysis of the data vindicated his position:
The problem for Trump is that while he’s been repeating this $17 billion deficit figure for a long time now, it’s just not true.
It’s also, to be clear, genuinely not clear why it matters. One of America’s largest imports from Canada is crude oil. If we made it illegal to import Canadian crude oil, our bilateral deficit would definitely fall in the short term.
But gasoline would also become more expensive. And with Americans spending more at the pump, their purchase of other goods and services would decline, leading to falling living standards and lost jobs.
At the same time, the value of the Canadian dollar would fall — which would lead to falling living standards north of the border but ultimately also give Canadian manufacturers an edge over their US competitors.
On net, almost everyone would end up worse off.
Sourse: vox.com
