President Donald Trump complained about the unfair trade deficit when he proved his latest tariff announcement, saying the United States had been “robbed, plundered, raped, plundered” by other countries for decades.

He accused China of “bleeding the United States” through unbalanced transactions, calling Canada’s tariffs on American dairy products “completely disgrace” and even pointed out that Cambodia is a country that “takes on our years of advantages over the years” and takes too high tariffs.

He repeatedly criticized what he missed was that the trade surplus benefited from the service industry in his country.

Services account for about 70% of the U.S. economy. These include a wide range of businesses including education, healthcare, travel and hospitality, financial services, as well as media and entertainment, insurance, maintenance and repairs, and fees used to use intellectual property rights.

Economists say exports of these services account for about 25% of the U.S. economy.

“The United States has a strong comparative advantage in several major service industries: education, health, finance, law, accounting, entertainment. This explains the trade surplus.”

In 2023, U.S. export services were worth $1.02 trillion, an increase of 8% over the same period last year, and import services were priced at $748.2 billion, an increase of 5%. This puts its trade surplus of $278 billion, a trend that dates back at least two decades.

“Trump may not know about the surplus in trade in services, but he is more likely to gain more popular recognition by talking about the flaws in making goods,” Huffbauer added.

Rachel Ziemba, an economist and part-time senior researcher at the New American Security Center, agreed that Trump never mentioned the indicator, which is “confusing.”

“Although he spent his career in service, he did the same way during his first term, even though he spent his career in service,” Ziemba said.

Ziemba said Trump’s focus on goods reflects the fact that manufacturing is important to the industrial base, including the defense sector, and that if too much manufacturing capacity erodes productivity, it would be problematic.

“However, surprisingly, he didn’t think about the whole situation, nor the way his policies put services at risk. In addition, reducing research undermined advanced manufacturing. His entire team underestimated the service.”

Vulnerable to retaliation

The reality is that many of Trump’s voters are making belts because in work and lifestyle, many plants have been eroded as jobs are relocated to cheaper destinations, which is why Trump focuses on trade imbalances.

In the transaction, when international borders began to reopen, trade stopped eagerly and initially resumed trade at the speed of a snail, there was also a lack of domestic manufacturing and supply chains.

But none of this makes Trump’s latest harsh tariff policy the reality that the U.S. service sector is vulnerable to retaliation.

Hufbauer said foreign countries can deny operating licenses for U.S. commercial companies and can tax digital services. They can also temporarily suspend copyright, trademark and patent rights or prohibit royalties.

For decades, the United States has been committed to ensuring access to foreign markets and intellectual property protection for U.S. service companies.

“Some countries are trying to limit the influence of Hollywood entertainment through screen quotas and other devices. Overall, these entertainment activities have not been successful. But this time they can propose stricter measures.”

“U.S. services and tech companies could lose a lot of market access and share market value due to Trump’s tariff war.”

While there are not necessarily alternatives to U.S. software, the state imposes taxes like digital service taxes and data localization requirements, although these taxes are more driven by privacy needs than as a source of income.

There are already some “local purchases” in trends around the world and resist our trends that can be formalized by government policies.

But, warn Ziemba that there is always a danger that this move could backfire for any country that plans to tax these U.S. services, as it will increase the cost of the domestic market and immediately retaliate from Trump.

By focusing on manufacturing services, Trump is leveraging “his judgment on where he can support political support”, Hefbauer said.