President Trump Claims the U.S. Has a Trade Deficit With Canada. That's Not So Clear

Updated: Mar 15, 2018 12:34 PM ET | Originally published: Mar 05, 2018

President Donald Trump has once again claimed that the U.S. has a trade deficit with Canada, boasting on Wednesday evening that he made up the claim during a meeting with Canada's Prime Minister Justin Trudeau.

"Trudeau came to see me...‘Donald, we have no trade deficit'," Trump said during a fundraising speech. Audio of the speech was first obtained by The Washington Post and confirmed by TIME. "I said, ‘Wrong, Justin, you do.’ I didn’t even know. ... I had no idea." He claimed he later double-checked his assertion with an aide, who confirmed its veracity.

Trump tweeted on Thursday reaffirming again the trade deficit. "We do have a Trade Deficit with Canada, as we do with almost all countries (some of them massive)," he wrote.

"P.M. Justin Trudeau of Canada, a very good guy, doesn’t like saying that Canada has a Surplus vs. the U.S.(negotiating), but they do...they almost all do...and that’s how I know!" he added.

But, whether this is true depends on whom you ask. Both the U.S. and Canada say they are running trade surpluses with each other.

Trump claimed earlier this month that the U.S. has a "large" trade deficit with Canada as part of a series of tweets about the proposed U.S. tariffs on steel and aluminum and the final round of North American Free Trade Agreement (NAFTA) talks.

"We have large trade deficits with Mexico and Canada. NAFTA, which is under renegotiation right now, has been a bad deal for U.S.A. Massive relocation of companies & jobs," Trump tweeted on March 5. "Tariffs on Steel and Aluminum will only come off if new & fair NAFTA agreement is signed."

Statistics from the Office of the United States Trade Representative refute Trump's claim of a trade deficit. The U.S. government agency said U.S. had a $12.5 billion trade surplus for goods and services in 2016, exporting $320.1 billion and importing $307.6 billion.

However, data from Statistics Canada says the U.S. had a $14.6 billion trade deficit for goods and services with its neighbor to the north in 2016, according to Bloomberg.

Data from both countries say that the U.S. imports more goods from Canada than it exports – the U.S. says the good trade deficit was $12.1 billion. Canada has complained that the the U.S. Trade Representative is falsely inflating that number by counting goods that merely pass through Canada from other countries.

Either way, the trade imbalance with Canada –America's second-largest trading partner – is nothing like the $55 billion trade deficit with Mexico, or the $385 billion deficit with China – America's largest trading partner. The trade deficit with European Union nations was $92 million, according to the U.S. Trade Representative.

In a sign of how much these numbers matter, Canada’s ambassador to the U.S., David MacNaughton, cited U.S. data – not his country's own – in refuting Trump claiming a trade imbalance in December.

Statistics Canada has previously identified discrepancies between U.S. and Canadian records, and attempts to explain them on its website, citing the "different data sources and statistical methods" the two countries use.

"In 2016, Canada reported a US$24.4 billion trade in goods surplus with the United States, while from the US perspective this surplus was reported as US$16.3 billion, a difference of US$8.1 billion," the website cites.

"It may be expected that the bilateral trade statistics of one country would mirror those of its trading partners. In practice, this is rarely the case, as countries use different data sources and statistical methods."

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