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The U.S. Trade Deficit with China: Separating Fact from Fiction

In recent weeks as the Trump Administration has ratcheted up protectionist tariffs on China, much of the line of argumentation coming out of the Department of Commerce and the Office of the US Trade Representative (USTR) has centered around the need to re-balance what is perceived to be an unfair widening of the U.S.-China trade deficit. However, what is important to note is that U.S. import statistics are highly misleading. As pointed out by Douglas A. Irwin in his book Free Trade Under Fire, in 2009 the United States imported iPhones from China at a per unit cost of $US 179 adding $US 1.9 Billion to the US trade deficit. […]

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