FORBES: Taking Trump’s Measure On Trade




February 23 | By: Phil Levy. 

There was an unusual Trump administration kerfuffle over trade this week. It wasn’t about slapping tariffs on Chinese goods, torpedoing the North American Free Trade Agreement, nor about trying to extract wall payments from the Mexicans. Instead, it was about a seemingly-obscure accounting measure: how re-exports would be treated when calculating trade deficits. So why would something like this prompt the Wall Street Journal to hit back with a damning editorial?

There are three reasons this move drew such attention:

  1. President Trump and his trade advisers have consistently railed against U.S. trade agreements. The President called NAFTA a “disaster.” But neither he nor his advisers have been very specific about what, specifically, they object to in such agreements. That means, in turn, that even those who follow trade closely have little clue how President Trump and his team plan to revise them. It doesn’t help that key trade team members seem to be approaching the trade issue from distinctly different directions, with little clarity about who is in charge. The closest they have come to specificity is the repeated complaint about bilateral trade deficits. That means that any new policy initiative that would change the measure of trade deficits seems highly relevant. This rumored new plan seemed designed to inflate trade deficit numbers with FTA partners.

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