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Trump is deluded about NAFTA

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The Trump administration is determined to renegotiate the North American Free Trade Agreement (NAFTA) — which created a single market from Mexico’s southern border to the Yukon — but the main political appeal of this policy rests on a popular myth: that “fair” trade requires the United States to have a surplus or balanced trade with both Mexico and Canada.

We are supposed to feel especially aggrieved that Mexico regularly has a sizable surplus with us, $63.2 billion in goods in 2016, according to Commerce Department figures. This shows, as the president repeatedly has said, that U.S. trade officials negotiated a bad deal for American firms and workers. Trump has promised to do much better.

That will be hard.

The whole theory of international trade assumes that countries specialize in products and services where they have a relative advantage. On a global basis, trade must balance; one country’s imports are another country’s exports. But some countries have surpluses and others have deficits, depending on their individual circumstances and histories.

If all countries tried to balance their trade with all other........

© Washington Post