FACT CHECK: Does The US Have Trade Deficits With ‘Almost All’ Countries?
President Donald Trump said in a tweet Thursday that the U.S. has a trade deficit with almost all countries.
We do have a Trade Deficit with Canada, as we do with almost all countries (some of them massive). P.M. Justin Trudeau of Canada, a very good guy, doesn’t like saying that Canada has a Surplus vs. the U.S.(negotiating), but they do…they almost all do…and that’s how I know!
— Donald J. Trump (@realDonaldTrump) March 15, 2018
“We do have a Trade Deficit with Canada, as we do with almost all countries (some of them massive),” Trump tweeted.
Verdict: False
Federal figures show that the U.S. had goods trade deficits with only about half of all countries in 2017, and experts say that when including trade in services, that number is even smaller.
Fact Check:
Trump frequently cites trade deficits when arguing for new trade policies. Earlier this month, he expressed concern about the trade deficit with China when he signed an executive order imposing new tariffs on steel and aluminum.
The Thursday tweet came after the Washington Post reported that Trump had admitted to making up facts about the trade deficit with Canada.
The U.S. does have a large global trade deficit, but that is mostly due to big deficits with major trading partners, not because it has deficits with “almost all” individual countries. On the contrary, the U.S. has trade surpluses with a large number of countries.
A trade surplus or deficit, called a trade balance, is determined by the value of imports and exports. If the U.S. exports more products to a country than it imports, it has a trade surplus with that country. If it imports more than it exports, it has a trade deficit.
The trade balance is made up of products in two categories: goods and services. The goods category accounts for physical merchandise like clothes and construction materials, and intangible products like transportation and licenses count as services.
Trump tends to focus only on the goods portion of the trade balance. He regularly says that the global trade deficit is $800 billion. That’s about the size of the goods trade deficit alone, but the total deficit is only $566 billion when including services.
Figures on only the goods trade balance from the International Trade Administration (ITA) and the Census Bureau show that of 234 countries and trading partners, the U.S. had a goods trade surplus with 130 and a deficit with 104 in 2017.
“Did we have a deficit with ‘almost all’ [countries]? Far from it,” Alan Deardorff, a professor of international economics and public policy at the University of Michigan, told The Daily Caller News Foundation in an email.
By Trump’s preferred metric – only the goods trade balance – the U.S. had a surplus with about half of the countries.
“His wording is ‘almost all.’ Well, to me, that suggests like 90 percent or some very high number,” Gary Clyde Hufbauer, a senior fellow at the Peterson Institute for International Economics, told TheDCNF.
The goods balance is only one part of the total trade balance, though, and does not give a complete picture of trade. “As far as I know, there’s no reputable economist who subscribes to that unitarian metric for measuring the worth of trade agreements, or trade generally,” said Hufbauer.
The other portion is the services balance. Most Americans work in the services sector, and services trade surpluses with individual countries offset some of the goods deficits.
For example, the Bureau of Economic Analysis (BEA) says that the U.S. had a $23.16 billion goods trade deficit with Canada in 2017, but when including the $25.93 services trade surplus, it had a $2.77 billion overall trade surplus.
The BEA calculates the combined goods and services trade balances for some countries, but not all. BEA data shows, though, that of 21 major trading partners, the U.S. had a total goods and services trade surplus with 10 and a deficit with 11 in 2016.
Hufbauer and Deardorff say that including services reduces the number of countries with which the U.S. has a trade deficit (as opposed to looking at goods alone). “How much it would cut it down, I don’t know, but it would reduce it somewhat,” Hufbauer said.
While ITA data shows that the U.S. has a goods trade deficit with 104 countries, the true number is smaller when including services. It’s not possible, though, to determine the exact number because full country-by-country services trade balance data is not available.
“It seems clear that we have a surplus with more countries when we include services than when we don’t, but beyond that, we can’t say much,” Deardorff told TheDCNF in an email.
Deardorff noted that while the U.S. does have trade surpluses with many countries, most of those surpluses are small. Some goods trade surpluses with small countries are only a few million dollars, according to ITA figures.
The U.S. has significant trade deficits with many top trading partners. In 2017, it had a $337 billion deficit with China, a $69 billion deficit with Mexico and a $68 billion deficit with Germany, according to the BEA. Surpluses with top trading partners only reached a fraction of the size: $35 billion with Hong Kong, $28 billion with Brazil and $20 billion with Singapore.
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