In a recent address, former President Donald Trump made several claims about the United States' trade relationships with Canada, China, and the European Union that have sparked widespread discussion and debate. While Trump asserted significant trade deficits and criticized current trade policies, data reveals a more nuanced picture. The US trade deficit with Canada was approximately $40.6 billion in 2023—far less than the $200 billion or $250 billion claimed by Trump. Additionally, the dynamics of oil imports from Canada play a crucial role in the trade relationship. Trump's remarks also included references to trade with China and Europe, highlighting perceived imbalances and policy criticisms.
The United States imports around 3.9 million barrels of Canadian crude oil daily, a vital component of its energy strategy. This heavy crude from Alberta's oil sands is highly sought after by US refineries. The reason? Canadian heavy crude is more affordable compared to the light sweet crude produced domestically in Texas and Louisiana. This cost advantage is significant for US refineries, which would face challenges sourcing heavy crude from other countries if Canadian supplies were unavailable.
"So, in fact, importing Canadian oil helps protect jobs in the US refining industry." – Donald Trump
The importation of Canadian oil is a major factor contributing to the US trade deficit with Canada. It provides a substantial benefit by helping to keep gas prices lower for American consumers. Contrary to Trump's assertion of a massive trade deficit with Canada, the actual figures tell a different story. The deficit is primarily driven by inexpensive Canadian oil imports rather than an overwhelming imbalance in broader trade.
Turning attention to China, Trump's claims about massive deficits also require examination. Under his presidency in 2018, the record US goods and services trade deficit with China reached approximately $378 billion. However, since President Biden took office, the deficit has remained below this peak, with the last full-year figure reported at about $252 billion in 2023.
"We’ve been having massive deficits with China. Biden allowed it to get out of hand. He’s – $1.1 trillion deficits; ridiculous, and it’s just an unfair relationship." – Donald Trump
Despite these claims, data suggests that the deficit has decreased during Biden's presidency compared to Trump's tenure.
In terms of trade with the European Union, the US maintains a significant presence in both vehicle and agricultural exports. In 2022, the EU imported 271,476 US vehicles, making it the second-largest market for American vehicle exports. Additionally, during the 2023 fiscal year, the EU purchased $12.3 billion worth of US agricultural exports, positioning it as the fourth-largest export market for these products.
“They don’t take our, essentially, don’t take our farm products, and they don’t take our cars.” – Donald Trump
This statement stands in contrast to the substantial volume of US exports that reach European markets annually.
Another focal point of Trump's remarks was corporate taxation. He highlighted his administration's role in reducing the US corporate tax rate from 35% to 21% through the 2017 Tax Cuts and Jobs Act.
“It was at 40%, and I got it down to 21%, the corporate tax,” – Donald Trump
This reduction is permanent, unlike changes to individual income and estate taxes which are set to expire at the end of 2025.
Moreover, Trump's assertion regarding inflation rates also drew attention.
“It was the highest inflation, probably, in the history of our country.” – Donald Trump
While inflation rates have fluctuated over time due to various economic factors, this claim necessitates careful analysis within historical contexts.
