It’s interesting how Trump’s zero-sum view of trade doesn’t apply when the U.S. has a surplus.
Among the ever-changing ‘justifications’ for the imposition of tariffs on Canada made by the Trump Administration is the U.S. trade deficit.
Despite this deficit being due entirely to energy (the U.S. benefits from importing heavily discounted Canadian oil), U.S. President Donald Trump falsely views it as the U.S. being taken advantage of by Canada. No matter how many times it’s explained that this is a false view of trade, the U.S. President continues to view trade as a zero-sum game.
Interestingly, however, the Trump Administration doesn’t apply this ‘trade deficits are ripoffs’ view to the services trade. And that’s likely because the U.S. has a large services trade surplus with many nations – including Canada.
Don’t just take my word for it; look at what the Office of the U.S. Trade Representative says:
“Trade in services with Canada (exports and imports) totaled an estimated $140.3 billion in 2023. Services exports were $86.0 billion; services imports were $54.3 billion. The U.S. services trade surplus with Canada was $31.7 billion in 2023.”
Every year, many Canadians travel to the United States and boost the U.S. services sector. Canadians also use many U.S. digital services.
Consider the many U.S. tech and entertainment companies that are ubiquitous in our lives. Apple, Meta, Google, Twitter, YouTube, Disney+, Netflix, and many more. Canadians use those services daily, and while, as noted in the data above, Canada exports a significant number of services to the U.S., it doesn’t match the U.S. total.
And if we were to include the value of data, the gap would be even larger.
Does the U.S. services trade surplus mean the U.S. is taking advantage of Canada? Does it mean Canada is being taken advantage of?
Of course not.
All it means is that Canadians are freely choosing to use U.S. services because they see those services as worth the cost.
However, this means that Canada is not taking advantage of the United States by having a trade surplus. Americans freely choose to purchase Canadian energy and – as noted previously – they get it at a discount.
However, if we are to accept Trump’s view of trade at face value (that it represents a zero-sum ripoff of the side with the ‘deficit’), shouldn’t the U.S. acknowledge their large services trade surplus with many nations?
That would at least be internally consistent, but it wouldn’t serve Trump’s extractive approach to U.S. allies. Trump wants unfair trade deals that are unfair in America’s favour. Acknowledging the strength of the U.S. services sector doesn’t align with the narrative he is trying to sell.
In the short term, this means Trump will likely get many ‘deals’ that impose higher tariffs on U.S. allies than those allies impose on the U.S. In the long term, this will weaken the U.S. economy by raising prices for businesses and consumers, and weaken U.S. influence over its allies as countries look to reduce trade dependence on the U.S.
Amid the barrage of lies being used to sell the idea of tariffs on U.S. allies, it remains important to hold on to the truth. It may be inconvenient to the Trump narrative to point out the U.S. services trade surplus with Canada, but it is important to continue speaking the truth and continuing to adhere to the facts. A powerful person twisting the truth doesn’t change the truth; it merely shows who is willing to submit to lies and who is willing to adhere to reality.
Spencer Fernando
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