Trump Administration Considers Change in Calculating U.S. Trade Deficit
Tweak in counting exports could bolster president’s case for redoing Nafta, other trade deals
The Trump administration is considering changing the way it calculates U.S. trade deficits, a shift that would make the country’s trade gap appear larger than it had in past years, according to people involved in the discussions.
.. The leading idea under consideration would exclude from U.S. exports any goods first imported into the country, such as cars, and then transferred to a third country like Canada or Mexico unchanged
Economists say that approach would inflate trade deficit numbers because it would typically count goods as imports when they come into the country but not count the same goods when they go back out, known as re-exports.
.. these employees at the U.S. Trade Representative’s office complied with the instructions, but included their views as to why they believe the new calculation wasn’t accurate... A spokeswoman for the Census Bureau, which calculates the trade deficit numbers, said she wasn’t aware of discussions about changing the data.
.. With their focus on domestic manufacturing, Trump administration officials want to measure exports of American-made products, not items shipped from abroad and re-exported... “As a statistician, you generally want symmetry,” said Steve Landefeld, former BEA director. “If you’re going to begin to exclude re-exports from the U.S. export figures, you probably for reasons of symmetry” would want to adjust import figures as well... He has repeatedly cited the $63.1 billion U.S. trade deficit with Mexico last year. Under the new approach the trade deficit with Mexico would be nearly twice as high, at $115.4 billion. The difference is mostly due to the treatment of re-exports.