Fact check: Trump's claims about trade with Canada and NAFTA
Hope Yen and Paul Wiseman, The Associated Press
Published Monday, September 3, 2018 5:26PM EDT
Last Updated Tuesday, September 4, 2018 1:42AM EDT
WASHINGTON -- U.S. President Donald Trump is playing loose with the facts in his exuberance to push through a trade agreement with Mexico.
He insists the deal reached this past week between the United States and Mexico to replace the North American Free Trade Agreement is "one of the largest trade deals" ever. It's not.
And in an effort to pressure Canada to join the reimagined trading bloc, or dismiss Canada as irrelevant if it doesn't, Trump also wrongly suggests that Mexico is a bigger and more important trading partner.
A sampling of the claims and the reality behind them:
TRUMP: "There is no political necessity to keep Canada in the new NAFTA deal. If we don't make a fair deal for the U.S. after decades of abuse, Canada will be out. Congress should not interfere w/ these negotiations or I will simply terminate NAFTA entirely & we will be far better off." -- tweet Saturday.
THE FACTS: Not so fast. It's questionable whether Trump can unilaterally exclude Canada from a deal to replace the three-nation NAFTA agreement, without the approval of Congress. Any such move would likely face lengthy legal and congressional challenges.
Trump wants to get a trade deal finalized by Dec. 1.
Several Republicans in the closely divided Senate are insisting that a revised NAFTA deal include Canada.
Trump administration negotiations to keep Canada in the reimagined trade bloc are to resume this week as Washington and Ottawa try to break a deadlock over issues such as Canada's dairy market and U.S. efforts to shield drug companies from generic competition.
TRUMP: "This is one of the largest trade deals ever made. Maybe the largest trade deal ever made." -- phone call Aug. 27 with Mexican President Mexican President Enrique Pena Nieto.
THE FACTS: Not even close. The Trans-Pacific Partnership, negotiated by the Obama administration, included the three NAFTA partners -- United States, Canada and Mexico -- plus Japan and eight other Pacific Rim countries. Trump withdrew the United States from the pact in his third day in office.
Even the TPP shrinks in comparison to the Uruguay Round of trade negotiations. Concluded in 1994, the round created the World Trade Organization and was signed by 123 countries. The Federal Reserve Bank of Boston found the following year that the WTO's initial membership accounted for more than 90 per cent of global economic output.
TRUMP: "We made the deal with Mexico. ...We're starting negotiations with Canada, pretty much immediately ... It's going to be a -- it's a smaller segment, as you know. Mexico is a very large trading partner." -- phone call Aug. 27 with Pena Nieto.
THE FACTS: Trump appears to be suggesting that Mexico is a bigger U.S. trading partner than Canada. That's not the case. America's two-way trade -- exports plus imports -- came to $680 billion with Canada last year. That's compared to $622 billion with Mexico.
I smile at Senators and others talking about how good free trade is for the U.S. What they don’t say is that we lose Jobs and over 800 Billion Dollars a year on really dumb Trade Deals....and these same countries Tariff us to death. These lawmakers are just fine with this!— Donald J. Trump (@realDonaldTrump) August 28, 2018
TRUMP: "I smile at Senators and others talking about how good free trade is for the U.S. What they don't say is that we lose Jobs and over 800 Billion Dollars a year on really dumb Trade Deals....and these same countries Tariff us to death." -- tweet Tuesday.
THE FACTS: The $800 billion is a reference to America's trade deficit last year. But Trump exaggerates the size of the gap between what the U.S. sells and what it buys from the rest of the world. The trade deficit in goods and services came to $552 billion in 2017. The United States ran an $807 billion deficit in goods such as cars and machinery. But Trump ignored America's $255 billion surplus in services such as education and finance.
Mainstream economists also take issue with Trump's assertion that trade deficits amount to a loss for the United States. The money didn't just vanish. In exchange for what they spent on imports, Americans got the benefit of owning everything from made-in-China iPhones to French wine.