Surplus or Deficit? Trump Quarrels With Canada Over Trade Numbers

from The Wall Street Journal,

Canada’s view that the U.S. has a surplus undercuts Trump administration’s push on Nafta.

The Trump administration is fighting a war of numbers with Canada, further escalating economic tensions with one of the biggest U.S. trading partners. President Donald Trump insisted on Thursday that the U.S. is at a trade disadvantage, while Canada denies anything of the sort. The trade balance is Mr. Trump’s preferred yardstick for measuring whether the U.S. is gaining or losing from economic relationships with its partners. That differs from the views of many economists, who say countries benefit from imports as well as exports and that a country’s overall trade balance is based on broad economic factors including investment and savings rates. The complexity of the statistics measuring U.S.-Canadian trade flows allows each side the ability to support its claim by choosing from an array of data. Trump administration officials typically focus on merchandise trade balances with other countries, which don’t account for trade in services such as insurance or tourism. The U.S. Census Bureau’s basic tally of merchandise trade with Canada lists U.S. exports at $282.4 billion and imports from Canada at $300 billion, indicating a deficit of $17.6 billion. Canadian officials prefer to include services trade as well as merchandise. That method, which gives highly competitive American services industries credit, gives the U.S. a small surplus of $2.8 billion in 2017, according to the U.S. Commerce Department.

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