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Uh oh. Canada posted another hefty monthly merchandise trade surplus with the United States in December (just as it has for decades, by the way).

This, alone, is enough to put Canada on U.S. President Donald Trump's naughty list, along with the likes of China and Mexico, and a target of a possible border tax.

In Mr. Trump's world, trade balances are the ultimate marker of economic success. A trade deficit is a loss for the United States – of jobs, economic growth and competitiveness.

"We have hundreds of billions of dollars of losses on a yearly basis – hundreds of billions with China on trade and trade imbalances, with Japan, with Mexico, with just about everybody," the U.S. President lamented last month.

In Canada's case, the "loss" for the United States was $4.4-billion in December, down slightly from $4.7-billion in November.

The trouble, of course, is the merchandise-trade deficit is a poor scorecard of anything – beyond an acknowledgment that Americans are buying more goods in Canada than vice versa. It is not a zero-sum game, in which exports are a plus and imports are a negative.

Trade balances are driven by such factors as savings and investment patterns, economic-growth differentials and currency and commodity-price movements. The United States is a serial net importer of capital. And when capital flows one way, goods and services typically flow in the other direction.

A trade deficit is often a sign of economic strength. It suggests the domestic economy is strong and that it is attracting global capital and causing people and companies to buy foreign products.

The opposite is also true. The U.S. trade deficit has tended to shrink in tough economic times. The country, for example, ran trade surpluses during the Great Depression and the 1990-91 recession – two periods of extreme hardship for Americans.

The more important metric to track is how countries handle their capital inflows. During the early 2000s, as China's trade surplus with the United States swelled, the Chinese were using the cash generated from export sales to buy U.S. Treasury bills. This drove down U.S. lending rates, caused Americans to borrow too much and ignited the housing market. And eventually caused it to crash.

A trade deficit can also drive capital to where it can be best put to use. Governments and companies can tap foreign inflows to build infrastructure, exploit natural resources and invest in new technologies. By borrowing internationally, a country can invest more, without cutting into domestic consumption.

In many ways, that's exactly what Americans are doing now – in spite of the Mr. Trump's upside-down claim that the United States is a victim of trade.

Let's take a closer look at the Canada-U.S. trade balance. Yes, Canada has historically run a merchandise-trade surplus with the United States, but it's heavily influenced by that country's appetite for vital resources, such as oil, to drive its economy. Strip out energy, and the United States actually runs a large goods surplus with Canada.

The United States also enjoys a large services-trade surplus with Canada – which isn't captured by the narrow merchandise-trade balance. That's largely because Canadians are so fond of travelling to the United States (spending by Canadian snowbirds in Florida is recorded as a U.S. service export).

The more important measure is the broader current account, which includes services and investment income. And on that score, Canada and the United States are in near-perfect trade balance.

Properly measured, it's very tough to make a case Canada belongs on Mr. Trump's naughty list.

Unfortunately, Canada and the rest of the world are facing a U.S. administration that is hell-bent on shrinking the trade deficit in the misguided quest for a big economic payday.

Achievement of the elusive trade balance will deliver none of that.

Instead, border taxes and a one-sided renegotiation of the North American free-trade agreement could prove very bad for the U.S. economy. American consumers and companies will lose access to the cheaper goods the world has to offer. And trade partners could hit back with protectionist measures of their own, harming U.S. exporters.

It's hard to see how this will all make America great again.

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