President Donald Trump met with some high-powered manufacturing CEOs in the White House this week, and made some claims about jobs creation, the state of US manufacturing, and trade deficits with Mexico and China that bear some scrutiny.

TRUMP: The United States lost one-third of our manufacturing jobs since NAFTA….And 70,000 factories closed since China joined the WTO.

DISCUSSION: It’s not at all clear NAFTA has contributed to the decline in US manufacturing jobs. A recent study showed US manufacturing employment as falling since the mid-1980s—before NAFTA was enacted—and dropping at a faster rate around 2001, when China entered the World Trade Organization. But manufacturing output has been increasing since the mid-1980s and is now almost equals the high achieved before the financial crisis of 2008-09. These figures suggest automation, and not trade, is main culprit for the loss of manufacturing jobs in the US.

US manufacturing exports to Canada and Mexico have increased 258 percent under NAFTA, and the agreement also helped generate a surplus in the agriculture and manufactured goods trades.

The reference to the 70,000 factories refers to a number that’s been floating around the internet for the last two or three years. It doesn’t pass the smell test.

The US could create more manufacturing jobs with a work force better trained for today’s advanced manufacturing operations. Recent estimates indicate that the skills gap in the United States costs the economy millions of jobs.

TRUMP: You’ve already seen companies such as Intel, Ford. GM, Walmart, Amgen, Amazon, Fiat–they came the other day; they’re going to make a tremendous investment in the country. Carrier and many others announced significant new investments in the United States. For example, Ford is doing 700 million in Michigan, creating 700 new jobs–is a vote of confidence. It was actually stated a vote of confidence….

DISCUSSION: The president is largely taking credit for jobs creation made possible by economic conditions that improved under the Obama administration.

A recent article in Real Clear Markets by Isabel V. Sawhill notes that corporate America may be anticipating of big tax cuts and deregulation and that the president may “use the government’s procurement policies to reward specific companies…But by and large, current job growth has nothing to do with his policies. Beware of fake news about fake job creation.”

Presidents who inherit a healthy economy want to take credit for the good news, Sawhill pointed out. That’s like thinking that the crowing of a rooster makes the sun rise, she opined.

TRUMP: With Mexico, we have $70 billion in deficits, trade deficits, and it’s unsustainable. We’re not going to let it happen. Can’t let it happen. We’re going to have a good relationship with Mexico, I hope. And if we don’t, we don’t. But we can’t let that happen–$70 billion in trade deficits. And that doesn’t include the drugs that pour across the border, like water. So we can’t let that happen.

With China, we have close to a $500-billion trade deficit. So we have to do something. I spoke to the President, I spoke to many people. We’re going to work on that very, very hard, and we’re going to do things that are the proper things to do.

DISCUSSION: The trade deficit is an accounting measure and is misplaced in a discussion about the economy. So has held capitalist theory since Adam Smith published The Wealth of Nations in 1776.

As Thomas Sowell points out in his textbook Basic Economics (5th Edition, 2015):

At one time, it was widely believed that importing more than was exported impoverished a nation…. However, as early as 1776, Adam Smith…argued that the real wealth of a nation consists of its goods and services…

Too many people have yet to grasp the full implications of that, even in the twenty-first century. If the goods and services available to the American people are greater as a result of international trade, then Americans are wealthier, not poorer, regardless of whether there is a “deficit” or “surplus” in the international balance of trade.