Trump Hates Trade Deficits,
But Which Ones Really Matter?

President Donald Trump is fixated on deficits as measures of how the U.S. gets the short end of the stick in trade deals. He’s had Mexico in his Twitter crosshairs for selling $63 billion more in goods to the U.S. than it buys, blaming “one-sided” Nafta for a “massive” imbalance—one he's promised to fix by renogotiating the terms of the agreement.

That $63 billion deficit represents a 12 percentage-point import-export gap, considering that U.S. imports from Mexico are 56 percent of total trade between the two and exports to Mexico are 44 percent. While the size of a gap helps determine if a trade deal is a dud, Mexico is hardly America's biggest problem. The U.S. runs deficits with most of its more than 75 trading partners. The U.S. trade deficit totaled $743 billion in 2016—a 20 percentage-point import-export disparity.

When you consider the size of the gaps the U.S. has with some of its biggest trade partners, U.S deficits with Nafta partners Canada and Mexico are relatively minimal. A 65 percentage-point import-export difference favors Ireland in the largest trade deficit of America's 15 top trading partners. A 60 point gap favors China. The U.S. has big imbalances with Japan, Germany and India, too. The U.S. came out on the other side of the split with the Netherlands, the U.K. and Brazil; each bought more from the U.S. than it sold back in 2016.

In sheer dollars, China tops the lopsided list. The U.S. does more trade with China than any other country. In 2016, the U.S. bought $347 billion more from the Chinese than it sold to them—an 80-20 split.

Trump's fixation with renegotiating Nafta is understandable when you consider that trade with Canada and Mexico exceeded $1 trillion last year. But massive trade gaps with China and other countries show that changing Nafta won't get the U.S. much closer to global trade parity.