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The Other Side Of The Trade Coin -- Digby
https://digbysblog.net/2025/05/27/the-other-side-of-the-trade-coin/Services —which Trump doesn’t know exists
Trump thinks trade is only about widgets. It is not. As Catherine Rampell points out, it’s also services and in that the United States is the undisputed leader:
The idea proposed by the free trade promise was that as manufacturing moves offshore to places where production costs were lower and their workers would benefit while here in the U.S. we would sell services in return and our workers would benefit. It didn’t always work out that way for certain sectors of workers in either place, which is why there is a backlash among those who were left behind. But overall, this did benefit the economy as a whole even in the U.S. which grew smartly over this period. Had the accompanying promises of re-training and the like come through, it would have been even better.
But Trump doesn’t acknowledge any of this because he doesn’t understand trade. He thinks it’s all about goods and completely ignores services acting like it isn’t part of the equation. And while it it’s no doubt useful for the U.S. to manufacture more of certain types of goods in the U.S. for national security purposes (Biden and the CHIPS Act????) on the whole this idea is sure to fail. The American people do not all want to be factory workers and that goes triple for those who want to get a college degree and work in a white collar or service industry. I really don’t think telling scientists to build iPhones is a winning strategy unless he really plans to go fully Maoist Cultural Revolution (which he might!)
. . .
President Donald Trump says he wants to reduce our trade deficit. Yet he’s destroying one of our winningest exports: higher education.
Colleges and universities are among America’s most competitive international exporters. In dollar terms, last year, the United States sold more educational services to the rest of the world than it sold in natural gas and coal combined.
We also run a huge trade surplus in this sector, meaning that foreigners buy much more education from the United States than Americans buy from other countries. In the 2022-2023 school year, more than three times as many international students were enrolled in the United States as there were American students studying abroad. Translated to cash: Our education-services trade surplus is larger than the trade surplus in the entire completed civilian aircraft sector.
Why? Regardless of what Trumpland claims, America is really, really good at higher education.
[…]
As with many politicians, Trump’s trade agenda fetishizes 1950s-stylemanufacturing rather than21st-centuryservices, even though it is the latter that the United States excels at producing and selling abroad. (Think not only education, but also software, engineering, entertainment, financial services, etc.) We run a huge trade surplus in the services sector, which Trump perplexingly excludes when quantifying our trade balance.
The idea proposed by the free trade promise was that as manufacturing moves offshore to places where production costs were lower and their workers would benefit while here in the U.S. we would sell services in return and our workers would benefit. It didn’t always work out that way for certain sectors of workers in either place, which is why there is a backlash among those who were left behind. But overall, this did benefit the economy as a whole even in the U.S. which grew smartly over this period. Had the accompanying promises of re-training and the like come through, it would have been even better.
But Trump doesn’t acknowledge any of this because he doesn’t understand trade. He thinks it’s all about goods and completely ignores services acting like it isn’t part of the equation. And while it it’s no doubt useful for the U.S. to manufacture more of certain types of goods in the U.S. for national security purposes (Biden and the CHIPS Act????) on the whole this idea is sure to fail. The American people do not all want to be factory workers and that goes triple for those who want to get a college degree and work in a white collar or service industry. I really don’t think telling scientists to build iPhones is a winning strategy unless he really plans to go fully Maoist Cultural Revolution (which he might!)
. . .