Trump Threatens To Kill The Best US Net Export: Services

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Posted: Mar 19, 2018 11:29 AM
Trump Threatens To Kill The Best US Net Export: Services

Services, especially education, are the only bright spot in the US trade picture. Trump threatens to kill that.

The U.S. runs big trade surplus in higher education. About one-third of the foreign students generating that surplus come from China.

Nonetheless, Trump Threatens Student Visas.

The White House is considering limiting visas to Chinese students as part of a broad package of measures targeting Beijing, which the U.S. accuses of violating intellectual-property laws and other misdeeds. A White House official said the package, including tariffs, could be unveiled later this month.

China sends more students to the U.S. than any other nation, accounting for roughly one-third of the 1.1 million international students enrolled at American universities in the 2016-2017 academic year. China has long valued access to U.S. colleges and universities, which consistently rank among the best in the world.

When international students and their families spend money at American colleges, it is considered an export for the U.S. because money flows from a foreign country to the U.S.

Foreign students attending American educational institutions accounted for $39.4 billion in U.S. exports in 2016, Commerce Department data show.

Data Way Understated

The data are way understated because the numbers include tuition and perhaps some room and board.

Meals, books, nightlife, entertainment, travel, etc. are not included in the trade surplus numbers. Nor is rent, unless it was paid directly to the university.

Services - Net Trade Surplus

The US consistently runs a positive balance of trade in services. More than 100% of that is education.

Why? The total services surplus is $22 billion, whereas education alone provides about $30 billion net, not counting meals, books, rent, etc.

If Trump kills student visas, that surplus could easily turn into a deficit. Trump threatens to do just that.

Hidden Value

The setup is even worse as reader "Sechel" explains:

It's not just balance of trade, but we're giving up the hidden value of goodwill and the promotion of US values both at home and abroad. This is just a another version of the Voice of America. When these students go home, they're able to counter any incorrect narrative of the US that their government and media put out. Foreign students that come here see first hand our values and our culture.