'Totally silly': Trump's 'made-up approach' to trade baffles economists

The New York Times on Wednesday interviewed several experts on international trade who were utterly baffled by President Donald Trump's obsession with bilateral trade deficits, which Trump has long cited as evidence that other nations are "taking advantage" of the United States.

In reality, a trade deficit simply means that the United States imports more net goods from foreign countries than foreign countries import from the United States, and experts say that there are many reasons such trade deficits exist that have nothing to do with other nations "cheating" in international trade.

“It’s totally silly,” Dani Rodrik, an economist at Harvard University, tells the Times of Trump's trade deficit obsession. "There’s no other way to say it, it makes no sense."

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The Times goes on to explain that calculating trade surpluses and deficits is also not an exact science, as the Netherlands technically has a trade surplus with the United States but only because its ports are the locations where American goods arrive before they are shipped throughout Europe.

"The Netherlands unloads U.S. goods in its ports and sends them throughout Europe to other consumers, while Singapore does something similar for Asia," the Times writes. "But a trade deficit is calculated based on the country the good reaches first, not its ultimate destination."

The question of how trade deficits are calculated is particularly relevant given how much the Trump administration relied on trade deficit numbers to calculate the number of tariffs it is slapping on foreign goods.

Mary Lovely, a senior fellow at the Peterson Institute for International Economics, mocked the Trump administration's tariff formula and argued that it "gives a gloss of science to what is essentially a made-up approach."