{"id":463,"date":"2018-03-07T13:16:55","date_gmt":"2018-03-07T18:16:55","guid":{"rendered":"http:\/\/www.gopplaybook.com\/?p=463"},"modified":"2018-03-07T13:16:55","modified_gmt":"2018-03-07T18:16:55","slug":"fact-check-president-trumps-exaggerated-and-misleading-claims-on-trade","status":"publish","type":"post","link":"https:\/\/www.gopplaybook.com\/?p=463","title":{"rendered":"FACT CHECK: President Trump\u2019s Exaggerated and Misleading Claims on Trade"},"content":{"rendered":"
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The president\u2019s claims about enormous trade deficits, tariffs and the World Trade Organization are overstated and contradicted by his own economic report.<\/p>\n

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By\u00a0Linda Qiu<\/a><\/p>\n<\/div>\n<\/div>\n

This was updated on March 7, 2018.<\/em><\/p>\n

In defending his embrace of steep tariffs \u2014 and in comments that seem to encourage a trade war \u2014 President Trump has repeatedly claimed enormous trade imbalances, unfair practices and an international system that benefits everyone but the United States.<\/p>\n

Mr. Trump\u2019s promises to fix the problems he has identified through an aggressive trade agenda has appeared to unnerve markets, which fell when they opened on Wednesday. The dip came after Gary D. Cohn, the director of the National Economic Council,\u00a0announced on Tuesday his plans to resign<\/a>amid an internal White House struggle over Mr. Trump\u2019s\u00a0plan to impose large tariffs on steel and aluminum imports<\/a>.<\/p>\n

Regardless, Mr. Trump\u2019s trade claims are often overstated and contradicted by his own economic council. Here is a fact-check of recent comments that Mr. Trump has made on trade deficits, the World Trade Organization and tariffs.<\/p>\n

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\u201cFrom Bush 1 to present, our Country has lost more than 55,000 factories, 6,000,000 manufacturing jobs and accumulated Trade Deficits of more than 12 Trillion Dollars.\u201d\u00a0<\/em>\u2014\u00a0<\/span>March 7 post on Twitter<\/a><\/em><\/p><\/blockquote>\n

This needs context.<\/strong><\/h3>\n

From January 1989 to January 2018, the number of manufacturing jobs in the United States has decreased by\u00a0about 5.5 million<\/a>. There also were about\u00a077,000<\/a>\u00a0fewer domestic manufacturing factories, workshops and what the Census Bureau terms as \u201cestablishments\u201d in 2014 \u2014 the latest year with available data \u2014 than in 1989.<\/p>\n

 <\/p>\n

But it\u2019s not accurate to attribute all of these declines to trade, even if globalization clearly did contribute. Economists say technology had a role to play, too. As New York Times reporter Claire Cain Miller\u00a0has written for the Upshot<\/a>, multiple studies have found that industries like steel, computers and electronics were hit hard by automation.<\/p>\n

\u201cLast year we had a Trade Deficit of almost 800 Billion Dollars.\u201d \u2014\u00a0<\/em>March 7 post on Twitter<\/a><\/em><\/h2>\n

This is exaggerated.<\/h3>\n

Mr. Trump has cited this figure more than 50 times since 2015.<\/p>\n

A White House spokesman said the $800 billion deficit figure that Mr. Trump has cited refers to the trade balance in goods. The Department of Commerce reported a $810 billion deficit in goods in 2017, but a total trade deficit of\u00a0$566 billion<\/a>\u00a0that includes a trade surplus in services.<\/p>\n

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Mr. Trump\u2019s preoccupation with trade in goods contradicts his own\u00a0White House economic report<\/a>, which he signed and was released in February.<\/p>\n

The United States\u2019 economy has shifted \u201caway from manufacturing and toward service provision industries\u201d in recent decades, according the report. \u201cFocusing only on the trade in goods alone ignores the United States\u2019 comparative advantage in services.\u201d<\/p>\n

Like most developed countries, the United States is primarily a services economy, said Scott Lincicome, a trade analyst at the Cato Institute, a libertarian think tank. And American service sectors \u2014 like accounting, finance, technology, engineering and law \u2014 are globally dominant.<\/p>\n

\u201cBy focusing only on goods, you make it seem far weaker than it actually is,\u201d Mr. Lincicome said. Doing so also means \u201cignoring a large, growing and vibrant part of the economy,\u201d he said.<\/p>\n

\u201cWe have a deficit of approximately $500 billion a year with China.\u201d \u2014 March 6 remarks<\/em><\/h2>\n

This is exaggerated.<\/h3>\n

Even if Mr. Trump is referring only to the trade deficit in goods, he is off by more than $100 billion. The Commerce Department reported a deficit of $375 billion in goods with China in 2017. Overall, the United States had a\u00a0net deficit<\/a>\u00a0of $309 billion in 2016.<\/p>\n

\u201cWe have massive trade deficits with Canada and Mexico.\u201d\u00a0<\/em>\u2014\u00a0<\/em>March 5 post on Twitter<\/a><\/em><\/h2>\n

Partly true.<\/strong><\/h3>\n

In fact, the United States had a total trade\u00a0surplus<\/em>\u00a0of\u00a0$7.7 billion\u00a0<\/a>with Canada in 2016, and a surplus of $4.4 billion through the third quarter of 2017.<\/p>\n

\u201cMassive\u201d is a matter of opinion, but the United States did have a trade deficit of $63 billion with Mexico in 2016, and $52.2 billion through the third quarter of 2017.<\/p>\n

\u201cIf the E.U. wants to further increase their already massive tariffs and barriers on U.S. companies doing business there, we will simply apply a Tax on their Cars which freely pour into the U.S. They make it impossible for our cars (and more) to sell there. Big trade imbalance!\u201d \u2014\u00a0<\/em>March 3 post on Twitter<\/a><\/em><\/h2>\n

False.<\/h3>\n

The European Union imposes a 10 percent tariff on American-made cars, while the United States\u2019 tariff against imported European cars is just 2.5 percent. But that doesn\u2019t mean American cars are \u201cimpossible\u201d to sell in Europe.<\/p>\n

The United States is the third largest car exporter in the world, sending almost 70,000 cars to Britain, France, Norway and Switzerland in 2014, according to the Commerce Department. The Observatory of Economic Complexity at the Massachusetts Institute of Technology reported that the United States exported $11.8 billion in cars to\u00a0Europe<\/a>\u00a0in 2016.<\/p>\n

\u201cWhen a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win.\u201d \u2014<\/em>March 2 post on Twitter<\/a><\/em><\/h2>\n

This is exaggerated.<\/h3>\n

Actually, the United States had a trade surplus with five out of 15 major trading partners in 2016,\u00a0including Brazil ($22 billion), Singapore ($18 billion) and Britain ($14.7 billion).<\/a><\/p>\n

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\u00a0Mr. Trump\u2019s economic report also cautioned against counting trade deficits as losses or as a metric of economic health. It argued that deficits reflect myriad factors, including the strength of the dollar.<\/span><\/p>\n

\u201cThe United States has been able to sustain a trade deficit in part because of the role of the U.S. dollar in the global economy,\u201d according to the report. \u201cForeigners are happy to hold U.S. dollars and dollar-denominated assets, which they obtain by selling more goods and services to Americans than they buy.\u201d<\/p>\n

And as The New York Times\u2019 economic correspondent Jim Tankersley\u00a0has reported<\/a>:<\/p>\n

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\u201cMost economists do not see the trade gap as money \u2018lost\u2019 to other countries, nor do they worry about trade deficits to a large degree. That\u2019s because trade imbalances are affected by a host of macroeconomic factors, including the relative growth rates of countries, the value of their currencies, and their saving and investment rates. For instance, America\u2019s trade deficit narrowed dramatically during the Great Recession, when national consumption faltered.\u201d<\/p>\n<\/blockquote>\n

\u201cWe put tariffs on washing machines coming into the country. …Now we have plants being built; put a 30 percent tariff on.\u201d \u2014\u00a0<\/em>March 1 listening session<\/a><\/em><\/h2>\n

This confuses certain tariffs and exaggerates their impact.<\/h3>\n

Mr. Trump slapped steep tariffs on imported\u00a0washing machines and solar panels<\/a>\u00a0in January. He appears to have mixed up the rates for the two products.<\/p>\n

Solar panels face a 30 percent tariff. The first 1.2 million washing machines that are imported in 2018 face a 20 percent tariff; that levy grows to 50 percent against every machine afterward that comes into the United States. Those penalties are gradually phased down in the second and third year of the three-year tariff program.<\/p>\n

Complaints by Whirlpool Inc. about its Korean competitors prompted the White House action. It has since said it\u00a0added 200 jobs<\/a>\u00a0to a plant in Ohio in anticipation of demand resulting from the tariffs. It has not announced construction of any new plants.<\/p>\n

Samsung and LG Electronics\u00a0have<\/a>\u00a0said<\/a>\u00a0they will accelerate plans to open plants in the United States following the tariff announcement. But Samsung announced its plans to build a factory in\u00a0South Carolina last June<\/a>\u00a0and LG said it would build a new facility in Tennessee in\u00a0February 2017<\/a>.<\/p>\n

\u201cBut the World Trade Organization makes it almost impossible for us to do good business. We lose the cases, we don\u2019t have the judges. We have a minority of judges.\u201d<\/em>\u00a0\u2014\u00a0Feb. 26 speech to governors<\/a><\/em><\/h2>\n

This is misleading.<\/strong><\/h3>\n

Mr. Trump\u2019s claims of bias are contradicted by his own economic report.<\/p>\n

The United States has won more cases than the global average. According to the White House report, \u201cthe United States has won 85.7 percent of the cases it has initiated before the W.T.O. since 1995, compared with a global average of 84.4 percent. In contrast, China\u2019s success rate is just 66.7 percent.\u201d<\/p>\n

In cases where the United States is the respondent, \u201cit still wins 25 percent of the time, a rate that is better than the global average rate of 16.6 percent,\u201d the report noted. That rate is far better than the rates of the European Union and Japan (which have never won a case brought against them) and China (which has won only 5.3 percent of the time).<\/p>\n

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Correction:<\/strong>\u00a0
Because of an editing error involving a satirical text-swapping web browser extension, an earlier version of this article misquoted a passage from an article by the Times reporter Jim Tankersley. The sentence referred to America\u2019s narrowing trade deficit during \u201cthe Great Recession,\u201d not during \u201cthe Time of Shedding and Cold Rocks.\u201d (Pro tip: Disable your \u201cMillennials to Snake People\u201d extension when copying and pasting.)<\/div>\n<\/div>\n<\/div>\n
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Linda Qiu is a fact-check reporter, based in Washington. She came to the Times in 2017 from the fact-checking service PolitiFact.\u00a0@ylindaqiu<\/a><\/p>\n

A version of this article appears in print on\u00a0

The president\u2019s claims about enormous trade deficits, tariffs and the World Trade Organization are overstated and contradicted by his own economic report. 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