Menzie Chinn listens to the latest from Donald Trump so we don’t have to:
And by the way, Canada? They negotiate tougher than Mexico. Trudeau came to see me, he’s a good man, he said we have no trade deficit with you, we have none. Donald, please. Nice guy, good looking guy. Comes in. Donald we have no trade deficit. He’s very tough. Everyone else, getting killed or whatever. But he’s tough. I said, well Justin, you do. I didn’t even know. Josh, I had no idea. I just said you’re wrong. You’re wrong. It was so stupid. [LAUGHTER]. I thought it was fine. I said, you’re wrong Justin. He said, nope we have no trade deficit. I said, well in that case I feel differently. I said but I don’t believe it. I sent one of our guys out. His guy, my guy. They said check because I can’t believe it. Well, sir you’re actually right, we have no deficit but that doesn’t include energy and timber. [LAUGHTER]. Well you don’t have timber, and when you do we’ll lost $17 billion. It’s incredible.
Menzie provides this source on our 2016 bilateral trade surplus with Canada:
U.S. goods and services trade with Canada totaled an estimated $627.8 billion in 2016. Exports were $320.1 billion; imports were $307.6 billion. The U.S. goods and services trade surplus with Canada was $12.5 billion in 2016.
OK we had a trade surplus when measuring both goods and services. But wait:
Goods exports totaled $266.0 billion; goods imports totaled $278.1 billion. The U.S. goods trade deficit with Canada was $12.1 billion in 2016. Trade in services with Canada (exports and imports) totaled an estimated $ 83.7 billion in 2016. Services exports were $54.2 billion; services imports were $ 26.9 billion. The U.S. services trade surplus with Canada was $24.6 billion in 2016.
Trump has a propensity to ignore our service surpluses focusing on our goods deficit, which was $12.1 billion in 2016. Census notes for 2017, we exported $282 billion to Canada and imported almost $300 billion from Canada so we continue to have a modest goods trade deficit, which is likely what Trump was referring to. I submitted two comments at Menzie’s place with this one making it to his blog:
My God – Trump is really stupid and people laugh it off? I do not grow fruits and vegetables but since I try to eat healthy, I buy a lot of them from my grocery store. To say I “lost” a lot of money to them is beyond stupid. No I earn my income another way and my firm I guess has lost money to me even if they profit quite well from my services. Jeffrey Sachs had a great line on Trump’s utter stupidity the other day – something I featured over at Econospeak.
Not sure what happened to the other one but this is the one that captures my utter frustration with Trump’s idiocy which I did note here:
Trump equates our trade deficit with us being ripped off. Let’s do this as a simple example. You walk into Best Buy and purchase a $1000 computer but do not have cash. So you put it on your credit card incurring a $1000 liability. Even though you now have the computer and Best Buy does not – Best Buy just ripped you off as you have a $1000 financial obligation. An odd statement from someone who routinely defaulted on his financial obligations!
Jeffrey Sachs nailed this:
But don’t expect an impulsive and ignorant man like Trump to heed the lessons of economic history, logic of retaliation, and the basics of trade. His actions are based on three primitive fallacies. First, Trump thinks that America runs trade deficits with countries like China and Germany because the US is being swindled by them. The real reason is that the US saves too little and consumes too much, and it pays for this bad habit by borrowing from the rest of the world. The Trump theory of international trade is like a man in deep debt who blames his creditors for his spendthrift behavior. Come to think of it, that is precisely how Trump has spent his whole business career: over-borrowing, going bankrupt, and blaming his creditors.
If we add our imports of pulpwood and woodpulp, newsprint, and paper and paper products, we imported $5.4 billion from Canada. But to call this a loss is incredibly dumb. We happen to export about $5 billion of goods in these sectors to Canada. We also export over $30 billion in cars, buses, and trucks to Canada but import $46 billion in the same sector. So why is Trump picking on timber and not vehicles? Of course we run trade surpluses for other goods sectors so is Trump saying Canada lost to us with respect to trade in those sectors? The only thing that is “incredible” is the level of stupidity that our President utters.