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.

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.

Mike "Mish" Shedlock

@Shimshon @wootendw @Mish It's Shift-Enter

Oh, that is too much cotton candy for one post! And you are talking about values, schmalues, culture and schmulture....

Those students are intent on making money for themselves and not concerned with anything else. If they go home (or even if they are here) the only thing they would be doing is to get more jobs shipped from the US to their country. Period.

I think this is a negotiating position that Trump is taking. Foreign students who come to the US to study end up getting jobs on H1 visas that then keep getting renewed forever and ever. If the compromise is that they can come here to study and leave after the studies are completed (and take back the values and culture that they are supposedly imbibing here) would it be acceptable to the Mish types?? Of course not. Because what they want to do is to screw legal US citizens every way they want (job-killing trade deals, so-called right-to-work laws that impoverish them further, unchecked illegal immigration, red-carpet style legal immigration and on and on and on).

This "Russian spy" nonsense has no meaning now. If you are against unfair trade deals, the neoliberals will call you a "Russian spy". If you are against endless foreign wars, the neocons will call you a "Russian spy". Anyone who doesn't toe the establishment line on any issue, is now a "Russian spy" - environmentalists, Medicare-For-All activists, Black Lives Matter volunteers... you name it.

One problem is, deposited surplus, is that taxpayers for State schools pay quite a bit for the honor of helping these Universities run puppeymills for rich Chinese industrialist children. They are pushing out resident applicants not on merit, but because the Foreign students pay full ride plus more. So, you are not counting the lost opportunity costs that I, as a CA resident, could save by a) Not paying those taxes and ,b) having lower tuition to pay. UC system is cramming as many Chinese fullriders into system as possible which drives supply down and of course, tuition has doubled in last 10 years. If UC wants to run a private school for rich kids, then we should cut it off the State nipple. It was designed to provide LOCAL taxpayers a higher education.

What is fascinating to me is no matter how much common sense logic Mish serves up to his readers, the vast majority of them are Trumptards who defy any attempts at reason. Like their leader, you must not bother them with the facts, their minds are made up! Lemmings, full speed ahead! Over the cliff!

Thanks Escierto. I am equal party basher. Bush, Obama, Trump. There was one major thing Obama did right - Talk with Iran. Note how the Trump fans changed on North Korea. They wanted him to bomb North Korea, now they are praising the talks. The same group bashed Obama for wanting talks with North Korea.

Good, then these colleges will have to have seats for American students.These colleges only care about the sweet dollars they get from these students who go back to their countries and bash us.We're at more than just a trade war. Wake up!