WASHINGTON (AP) — President Donald Trump offers an incomplete picture of American trade and overlooks the risks involved in starting a trade war. Here's a look at his recent comments on trade as he prepares to impose big tariffs on imported steel and aluminum:
TRUMP: "The United States has an $800 Billion Dollar Yearly Trade Deficit because of our 'very stupid' trade deals and policies. Our jobs and wealth are being given to other countries that have taken advantage of us for years. They laugh at what fools our leaders have been. No more!" — tweet Saturday.
THE FACTS: No, the trade deficit is not $800 billion. It's $566 billion. The U.S. in 2017 bought $810 billion more in foreign goods than other countries bought from the U.S., says the Census Bureau. That deficit in goods was offset by a $244 billion trade surplus in services, like transportation, computer and financial services, royalties and military and government contracts.
Similarly, Trump has complained about a trade deficit with Canada even though the U.S. runs an overall surplus with that country — thanks to the value of services.
The president said in December that he corrected Canadian Prime Minister Justin Trudeau on this matter when they spoke. But the U.S. Trade Representative's Office said the U.S. enjoyed a $12.5 billion trade surplus with Canada in 2016. A $12.1 billion U.S. deficit in goods was overcome by a $24.6 billion surplus in services.
TRUMP: "When 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. Example, when we are down $100 billion with a certain country and they get cute, don't trade anymore-we win big. It's easy!" — a tweet on Friday in support of his announcement that he will impose tariffs of 25 percent on steel imports and 10 percent on aluminum imports.
THE FACTS: Trade wars have not been easy to win.
The president's argument, in essence, is that high tariffs will force other countries to relent quickly on what he sees as unfair trading practices, and that that will wipe out the trade gap and create factory jobs. But the record shows that tariffs, while they may help certain domestic manufacturers, can come at a broad cost. They can raise prices for consumers and businesses because companies pass on at least some of the higher costs of imports and imported materials to their customers. A trade war is also bound to mean that other countries will erect higher barriers of their own against U.S. goods and services, thereby punishing American exporters.
The United States first became a net importer of steel in 1959, when steelworkers staged a 116-day strike, according to research by Michael O. Moore, a George Washington University economist. After that, U.S. administrations imposed protectionist policies, only to see global competitors adapt and the U.S. share of global steel production decline.
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