‘US runs good trade deficit with Canada’

Bloomberg

Does the US run a trade deficit or surplus with Canada? It depends where you look.
President Donald Trump asserted—again—the US runs “a pretty good trade deficit” with Canada. The claim was quickly rebuffed by Canada’s ambassador to the US, David MacNaughton, who cited American data saying the opposite
was true.
Canadian officials tend to use US data to make their case and the Bureau of Economic Analysis has calculated the US had a $7.7 billion surplus in 2016. But Statistics Canada data show it’s Canada with the surplus in goods and services, totalling $14.6 billion in 2016. That’s a $22.3 billion difference between the two measures.
The debate isn’t just academic. The two countries, along with Mexico, are renegotiating the North American Free Trade Agreement, which Trump says needs to be corrected for trade imbalances. A mini-round of talks will be happening in Washington, but with Canadian and US statistics showing opposite pictures of the status quo any remedy remains unclear.
MacNaughton zeroed in on the issue when he took to Twitter in response to Trump. The ambassador also noted a $36 billion US surplus in manufacturing, again citing American data. “If what the US is interested in is trade balances, I’d really like to see some proposals come as to how to right the trade balance between Canada and the United States, which is in your favour.”
To be sure, it’s not clear what the bottom line would look like if the two measures were
harmonised, or which methodology better reflects the
true state of trade between the two countries.
For example, it could be argued Canada’s statistics agency is overstating exports. Canadian businesses often import goods from third countries such as China only to re-export those goods to the American market. Statistics Canada records that as a Canadian
export; the US data would record that as an import from China, not Canada. In other instances however, the US data may be failing to capture some Canada exports, particularly services that are much more difficult to measure than goods.
Since it’s the Trump administration crying foul, Canadian officials say it’s only fair to use the US government’s own assessment of trade imbalances.