Fact Checking the Washington Post's Fact Checker on Trade and Manufacturing

The objective of trade policy is economic growth. That’s why we trade – to create value. The data strongly suggest that economic growth and trade deficits increase and decrease contemporaneously. Looked at another way, if the goal of trade policy is to achieve a trade surplus, then by extension the goal of trade policy is slower economic growth, even contraction.
FC3:
Trump did manage to name specific countries with which the United States has trade deficits, but he’s wrong when he says the United States has a deficit with “everybody.” There’s barely a trade deficit with the United Kingdom, according to the International Trade Commission, and the United States has a trade surplus with Hong Kong ($30 billion), Netherlands ($24 billion), United Arab Emirates ($21 billion), Belgium ($15 billion), Australia ($14 billion), Singapore ($10 billion) and Brazil ($4 billion), among others.
Of course, the Fact Checker was merely checking Trump’s claims, but I’d say: Waste of time? Bilateral trade accounts are meaningless. They’re meaning because of the observations made with respect to Point 1, above.
In a globalized economy of cross-border investment and transnational production sharing, where nearly two-thirds of the value of global trade flows are intermediate goods, bilateral trade accounting is simply meaningless. A $300 import from China adds $300 to the aggregate value of imports from China, regardless of whether the Chinese material, labor, and overhead (the Ch...

Source: Cato-at-liberty - March 18, 2016 Category: American Health Authors: Daniel J. Ikenson Source Type: blogs