Trump’s Ridiculous Views on Trade Deficits

Trump’s Ridiculous Views on Trade Deficits June 12, 2018

It has become clear since the start of the 2016 campaign that Donald Trump, while claiming to be some kind of business genius, has not the slightest clue how trade deficits and budget deficits work, or even that there is a difference between the two. This his claim that it would be “easy” to pay off the entire federal debt by renegotiating our trade deals.

But this also explains his baffling statements about how other countries, including Canada, of all countries, are “robbing” us because they don’t buy enough of our products. He literally thinks that if a country does not buy as much or more from us than we buy from them — if they run a surplus in trade against us — they are, in his words, breaking into our piggy bank and taking our money. But think about how idiotic this is when it comes to a country like Canada.

Canada has a population one-tenth the size of the United States, about 35 million people as opposed to 350 million. In what possible reality could anyone rationally expect them to spend as much on American products as we spend on their given a market ten times the size? Of course we import more from them than we export to them. It’s virtually impossible for it to be otherwise. And even with that enormous disparity in population, and thus market size, our surplus in trade with Canada was still less than $10 billion. Canada is the absolute last country we should be concerned about when it comes to trade.

The same is true of most of our other major trading partners, with the exception of China, our largest trading partner and the one with whom we have the largest import-export disparity. Canada is #2. Mexico is #3 with a $71 billion trade deficit but a population that is just over one-third that of the United States, and that population, because of a lower standard of living, has far less purchasing power than Americans do. Japan has almost exactly the same population as Mexico and about the same size trade surplus against us. Germany, our fifth largest trading partner, has a $65 billion trade surplus against us but a population that is less than 25% of ours.

China is the one big exception to this. They have about 4 times the population we do and export more than $350 billion more to us than we do to them. But also bear in mind that a large percentage of that disparity is from American companies who have set up factories there, who ship raw materials there for assembly and then ship them back because it’s cheaper to produce them. And you know what company that includes? The Trump Organization. Donald Trump himself has a great many products made in China and shipped back here, contributing to the very trade deficit he then rails about.

His positions on trade are ignorant and hypocritical on every single level. And he is using that as a pretext to undermine the entire global trading order and disrupt our closest and most important alliances. He isn’t just a bull in a China shop, he’s an incredibly stupid bull in a Canada shop.

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