Surplus or Deficit? Trump Quarrels With Canada Over Trade Numbers

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

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.

.. The U.S. is asking Canada for a litany of changes in the Nafta talks, from big shifts in auto-industry rules to the elimination of dispute-settlement system, and Canada officials are responding with an argument tailored to Mr. Trump: Trade between the two countries is balanced, so no major changes are needed to existing Nafta provisions.

.. President Trump raised eyebrows at a fundraiser when he reportedly told guests that he recently insisted to Canadian Prime Minister Justin Trudeau that the U.S. has a trade deficit with Canada, despite having “no idea” if that was in fact the case.

“Trudeau came to see me…He said, no, no, we have no trade deficit with you, we have none,” Mr. Trump said Wednesday, according to a transcript published by the Washington Post. “I said wrong, Justin, you do. I didn’t even know. Gosh, I had no idea. I just said, ‘You’re wrong.’”

Trump considers media personality Larry Kudlow as top White House economic adviser

Media personality Larry Kudlow, a loquacious and energetic advocate of low taxes and free trade, has emerged as a leading candidate to replace Gary Cohn as director of the White House’s National Economic Council

.. Kudlow was an adviser to Trump during the 2016 campaign, working closely with Treasury Secretary Steven Mnuchin on the design of an initial tax plan. But Kudlow, in media appearances in the past month, has been critical of President Trump’s new plan to impose tariffs on steel and aluminum imports

.. Trump’s close relationship with Kudlow — and Kudlow’s experience speaking on television — have bolstered his candidacy for the job.

.. On March 3, Kudlow joined Steve Moore and Arthur Laffer in a column for that was sharply critical of Trump’s proposal to impose the new tariffs.

“Trump should also examine the historical record on tariffs, because they have almost never worked as intended and almost always deliver an unhappy ending,” they wrote.

.. It is unclear if Trump wants his next NEC director to advance an ambitious agenda or spend more time with the media defending the changes that have already taken place, such as tax cuts and efforts to roll back regulations.

The Daily Shot: The White House Defends Archaic Industries at the Expense of Value-Added Manufacturing

The decision to tax steel and aluminum imports was a political move that should, in theory, play well in races such as Pennsylvania’s district 18 special elections. The larger question, however, is whether the US wants to compete in the industrial commodities businesses that had peaked decades ago. Boosting these industries will be at the expense of value-added manufacturing, which has rebounded in recent years. Even China is now shifting out of these “old economy” sectors (#2 here). Ironically, higher import prices for industrial materials may encourage some firms to move more production outside of the US.

From the consumer’s perspective, these tariffs mean higher prices on thousands of products – from US-made cars to beer cans.