PHOTO: AFP

AFP, Paris

Imposing punitive tariffs on countries with high trade surpluses with the United States has been at the heart of US President Donald Trump’s economic policy.

Trump has lived up to his campaign pledges to resume his hardball trade diplomacy.

But analysts say trade imbalances can sometimes be the result of US policy itself.

What is a trade deficit?

A trade deficit occurs when a country’s imports exceed its exports to another country. The balance is usually calculated on trade of goods such as cars, electronics, farm products or oil and gas, among other things.

International comparisons usually focus on goods but some analysts say trade in services -- such as financial systems, transports, tourism or communications services -- should also be taken into account to get the full picture.

The United States, for instance, has a large trade deficit with many of its partners when just considering goods, but once services are taken into account the overall imbalance is less.

“Politicians are obsessed with the material nature of physical goods,” said Niclas Poitiers, a research fellow at Brussels’ think tank Bruegel.

Poitiers noted that countries can’t impose tariffs on services, hence Trump’s insistence on focusing on goods.

Who is Trump targeting?

“We have deficits with almost every country -- not every country, but almost -- and we’re going to change it,” Trump vowed at the beginning of February, while announcing he would imposed fresh tariffs on Canada, Mexico and China.

The United States posted a goods trade deficit of $295 billion with China in 2024, $63 billion with Canada and $172 billion with Mexico, according to the US Department of Commerce.

While the tariffs on China were implemented, Trump agreed to delay those against Mexico and Canada.

With the European Union, the deficit reached $157 billion in 2023, according to the Eurostat data agency, driven by trade surpluses in Germany, Italy and Ireland.

Japan, South Korea and India are also among the 10 countries with the largest surpluses.

Is the data reliable?

The numbers should be dealt with carefully as calculations can vary from one country to the next depending on local accounting norms, the exchange rate used, or to what extent transportation costs are included.

Such inconsistencies mean that some countries can go from having a surplus to having a deficit. France, for instance, had a goods surplus of $14 billion in 2023, according to US statistics, but a deficit of $7 billion according to French customs.

There are differences within the European Union, too, where national figures can differ from those of the European Commission.