I am anything but a fan of Donald Trump, still I am among the few in
my social circle who doesn’t suffer a level of derangement at the mere mention
of his name. Hence, the irony in my title
to this post. Nevertheless, I am happy
to point out when he is lying or wrong. In his pursuit of China, his consternation
with their trade policies, IP theft, and other misgivings is justified. But, his response is misguided, and, more
specifically, his interpretation of the data is exaggerated. In George Magnus’ book Red Flags, one
particular data point often volleyed around is clarified to the President’s
detriment:
“Yet, this
$370 billion US trade deficit with China is not all strict bilateral trade,
because China, as Asia’s prime supply chain hub, finishes off a lot of products
shipped there by, say, Japan and South Korea.
According to the value-added trade data of the Organization for Economic
Co-operation and Development (OECD), which allows for this sort of effect, the
US trade deficit with China was just $150 billion in 2017, and once you allow
for the US surplus in services, the total deficit was about $110-$120
billion. This doesn’t mean the Americans
don’t have legitimate arguments about Chinese trade and investment practices,
but it is important to bear this in mind in assessing the bluster that often
passes as trade policy.”
