Rip-off claims hoodwinking of US public: China Daily editorial

The US administration has long accused foreign countries of taking advantage of the United States at the expense of domestic jobs and US industries. In US President Donald Trump's view, the US has received less return value and resources for what it has given the world in terms of the amount of money, trade preferences and other resources. "They're ripping us off" is his constant refrain.

It is this fabricated premise of a long-standing grievance that has been the launchpad for his administration's sweeping "Liberation Day" tariffs targeting almost all foreign imports, and which have set up a global trade war and promise to upend the decades-old global trading order.

Though the US leader hit a 90-day pause button on many of the tariffs after his radical power play resulted in US stocks volatility, bond yields surging and recession fears intensifying, his administration's haughty demolition job on the global trade system is far from over, not least because there is still a 10 percent tariff on virtually all exports to the United States. This provides leverage for the US administration to extract concessions in terms of the real trade war it is waging against China and in reshaping the bilateral relations with the US' other trade partners in favor of the US by extorting undue concessions.

One of the aims of the US administration is to use the tariffs to close, if not reverse, the trade deficits with nearly all of the US' trade partners. The preoccupation with trade deficits stems from a warped idea that they are proof that the US has been exploited by other countries. This has also made the US president and his trade advisers wrongly claim that the current rules governing global trade have put the US at a distinct disadvantage.

This is contrary to the belief of mainstream economists that a trade deficit simply means a country is importing more goods and services from a given country than it is exporting to that market, and has nothing to do with the state of a country's economic health.

While bemoaning surging deficits in the US' trade of goods with other countries, the US administration has deliberately ignored the fact that the US sells far more services than it buys from other countries, which means the US' service sector enjoys a trade surplus with almost every trading partner around the world, including those at the center of the ongoing trade war such as China and the European Union. The service sector includes retailers, software, internet and telecom providers, movie studios, as well as health care providers, law firms and accounting agencies. According to the US Commerce Department, the US' trade surplus in services rose to $293 billion in 2024, up 5 percent from 2023, and 25 percent from 2022.

Trade in services, especially finance, legal, entertainment, and high-tech services, has become a major source of US economic strength. In 2023, US services exports were worth more than $1 trillion, accounting for 13 percent of the global total, and they expanded a further 8 percent last year, according to the World Trade Organization. "Global trade in services ... is booming. And there is a clear winner on this front: the United States," wrote Ngozi Okonjo-Iweala, WTO director-general.

Moreover, Trump's claim that foreign countries steal US manufacturing jobs through unfair trade practices, and that only sweeping tariffs will help the US reverse the decades-long decline in manufacturing and create related jobs is out of step with historical realities.

This is because service sector jobs have long driven the US economy — the sector employed 57 percent of private sector nonfarm workers in 1939, when the US Labor Department started tracking US employment, and today, service sector businesses account for 84 percent of those jobs.

The modern manufacturing reality suggests that, even if US companies do reshore, the cost of labor in the US means it is more economically viable for machines to do the work than humans.

The US is not getting ripped off by anybody. The problem is the US has been living beyond its means for decades. It consumes more than it produces. It has outsourced its manufacturing and borrowed money in order to have a higher standard of living than it's entitled to based on its productivity. Rather than being "cheated", the US has been taking a free ride on the globalization train.

The US should stop whining about itself being a victim in global trade and put an end to its capricious and destructive behavior. Instead, it should commit itself to working with its trading partners to establish a fair, free and WTO-centered multilateral trading system that is in line with the times.