President Donald Trump reportedly plans to tweak the method of calculating the U.S. trade deficits to bolster president’s case for redoing Nafta and other trade deals.
People involved in the discussions told the Wall Street Journal that one methodology being tested would exclude re-exports — goods that are first imported into the U.S. and then exported unchanged to a third country.
The net effect could make the trade gap appear larger, according to economists, because such goods would be counted when imported but not when exported, CNBC.com explained.
Data on trade balances and surpluses, widely followed by Congress, are at the center of a political battle over whether existing trade agreements should be retained, renegotiated or tossed out altogether, WSJ/com reported.
A larger trade deficit would give the Trump administration ammunition in arguing that trade deals need to be renegotiated, and might help boost political support for imposing tariffs, the Journal explained.
“Career government employees objected last week when they were asked to prepare data using the new methodology, according to the people familiar with the discussions. These employees at the U.S. Trade Representative’s office complied with the instructions, but included their views as to why they believe the new calculation wasn’t accurate,” the Journal explained.
“The effect of such a change would be particularly stark on data involving countries that have free trade deals with the U.S., this person said—and in some cases the new methodology could even change a trade surplus into a trade deficit,” the Journal reported.
Trump trade officials said the idea is part of an early discussion and that they are examining various options. It is unclear whether the administration would adopt any new approach for measuring trade as part of official government data, or just use the higher deficit calculation to make the case for new trade deals, the Journal explained.
The deficit in December fell 3.2 percent to $44.2 billion, the Commerce Department reported earlier this month. A gain in exports of commercial aircraft, heavy machinery and autos offset a rise in imports. For the whole year, the deficit rose 0.4 percent to $502.3 billion, the highest annual imbalance since 2012, the Associated Press reported.
Trump has pledged to impose penalty tariffs on countries such as China and Mexico to force them to drop what he contends are unfair trade practices that have cost millions of American jobs.
Since taking office on Jan. 20, Trump has pulled the country out of a 12-nation Pacific trade deal negotiated by former President Barack Obama. He has given notice that he also wants to renegotiate a two-decade-old free trade agreement with Mexico and Canada.
Trump has also gotten into a dispute with the president of Mexico over who will pay for a border wall between the two countries. The Trump administration has suggested it might use a 20 percent border tax on goods from Mexico to pay for the wall.
Trump made America's large trade deficits, lost factory jobs and stagnant wages for the middle class a central part of his campaign.
For 2016, America's deficit with China actually declined slightly, dropping 5.5 percent to $347 billion after hitting an all-time high of $367.2 billion in 2015. Even with the improvement last year, the deficit with China is the largest with any country.
The deficit with Mexico rose 4.2 percent in $63.2 billion in 2016, the largest imbalance with that country since 2011.
Trump has contended that both China and Mexico are using unfair trade practices such as currency manipulation to boost their sales to the United States. Private economists contend that broader factors, such as lower wages in both China and Mexico, play a bigger role in determining the trade deficits.
While his first few weeks have certainly been volatile and controversial, Trump will be a demanding leader who applies the best of his negotiating skills to push for U.S. growth, bestselling author David Horowitz recently told TheStreet.com.
Trump won’t be an ideological purist like Republicans who support free trade but don't fight for fair trade, Horowitz said.
“If you just say, ‘well we're for free trade and we're not going to look at the deals that we make’ -- that's not a good idea,” he said. “We've had an anti-business president now for eight years who doesn't take a hard-nosed attitude towards these deals. Trump is going to get better deals for us, which is still free trade.”
Horowitz's new book, "The Big Agenda: President Trump's Plan to Save America," reveals Trump's "first 100 days strategy" to roll back Obama's legislative and executive record.
Horowitz's new book is the first book about the Trump presidency and has soared to the top of the Amazon bestseller charts, becoming the No.1-selling book on the web. Trump will also lead the way in making infrastructure spending to boost the U.S. economy, Horowitz said.
“If the economy grows as it will under Trump, there's going to be a lot more money to spend,” he said.
"Big Agenda: President Trump's Plan to Save America" is available at bookstores everywhere – or get your copy on Amazon – Click Here Now
(Newsmax wire services contributed to this report).
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