The Trump administration looks to redefine trade metrics to give the impression that the trade deficit is larger than it is. According to The Wall Street Journal, individuals associated with these talks have suggested that the team looks to remove any goods first imported into the country then sent to a third nation from the list of US exports.
Manipulating how exports and imports are defined shifts the balance of trade, which is calculated by taking the total amount credited from selling exports overseas and subtracting the amount debited to pay imports. If the administration follows through with the aforementioned suggestion, then it would insinuate that our nation sells less goods and buys far more from places like China, Taiwan, Mexico, and other nations.
This would fuel Trump’s protectionist fires, as some economists suggested, giving the President additional grounds for jamming controversial trade policies through. According to Trump’s logic, if his administration lowers the number of exports, then it will increase the trade deficit.
However, manipulating economic statistics could lead to additional problems. Steve Landefeld, the former director of the Bureau of Economic Affairs (BEA), stated the statisticians look for symmetry in their analyses, suggesting that “[i]f 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.”
Much of the controversy surrounding Trump’s trade talk comes from a long debate on why Rust Belt jobs have disappeared. While the Center for Business and Economic Research at Ball State University suggested that 85% of the manufacturing jobs lost between 2000 and 2010 came as a result of automation rather than trade deals. Trump thinks that exploiting statistics will offset the evidence that automation is the larger culprit behind the decline of American manufacturing. However, Trump’s attempt to disseminate alternative facts from fudged metrics will only create more economic hardship rather than bring jobs back to the United States.
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