04/11/25 Afternoon CommStock Report – Services versus Goods Trade Balance

All these claims by the Trump Administration about trade deficits exclude exported services in their calculation. Surely the sale of services to other countries means income to the US. If you include services, the US comes up with a more balanced trade with many countries, which goes against the trade deficit claim. In 2024, US services exports reached a record $1,107.8 billion, up $81.2 billion from the previous year, driven by increases in travel, business services, and financial services. Exports were $3,191.6 billion, up $119.8 billion from 2023 so one can see that services were too large of a contribution to just ignore. In the case of Canada, which has been a huge consumer of US services, they run a very small overall trade deficit if services are included with goods balancing trade. When all these Canadians winter in the US they spend money here in the US that is included in the services category (they used to). President Trump excluded services from his creative calculation of tariff rates, so he could show a deficit and higher tariff for all countries. If we include services this deflates his argument. The formula they used, starting with the overall trade deficit, would have calculated much lower reciprocal…