President Trump’s fascination with the trade deficit seems to have led him along a path where he is missing the “big picture.”
In 2024, the US trade deficit reached $918 billion. This imbalance, however, varies significantly across different goods and services. Notably, the $293 billion trade surplus in services acts as a counterbalance to the $1.211 trillion deficit in goods. Trump’s tariffs primarily target products and not services.
A closer look at the surplus in services trade reveals that education plays a vital role, particularly due to education-related travel exports. In 2023, this amounted to $50 billion. More than 1 million international students were enrolled in US higher education institutions in 2023, representing a notable influx of human talent and economic activity. Many of these students pursue advanced degrees in STEM fields like computer science, engineering, and health professions (including medicine), whose short-term and long-term contributions to the US economy are well recognized.
Many of these students are destined to occupy crucial roles within the domestic industry that require highly skilled and technical workers that the US struggles to recruit locally. For instance, within healthcare programs, fewer than 25% arise from international health programs especially with about six non-citizens. Their absence would greatly destabilize the US healthcare system, particularly in rural areas where it’s hard to fill medical positions.
This situation also holds true for the tech industry. International students significantly contribute to advancing their initiatives, especially in fields requiring advanced expertise in computer science and engineering which are essential for sustained growth and technological innovation. Without access to such talent, the high-tech sector’s economic outlook would be considerably more challenging.
So, what actions is the president taking?
Initially, he is targeting higher education, by freezing federal funding for various institutions, particularly those deemed prestigious. He is leveraging DEI initiatives as pretexts to penalize such schools for perceived failures in this area, alongside protecting Jewish students on campuses. Institutions such as Columbia, Cornell, Pennsylvania, Princeton, Harvard, Johns Hopkins, and Northwestern are already targets with more likely to follow suit.
Ironically, many of his cabinet and agency leaders have backgrounds from these institutions, including Secretary of Defense Pete Hegseth (Princeton) and Secretary of Health and Human Services Robert F. Kennedy Jr. (Harvard). Additionally, Trump himself graduated from Pennsylvania.
All these institutions house prestigious medical and engineering programs. Their graduates, national and international alike, fulfill many vital infrastructure roles, and if these positions are neglected, it could severely affect national well-being.
Secondly, he has canceled visas for students from these and other colleges. It is uncertain how many students have been affected and the implications for the talent pipeline. The potential talent loss in medicine and engineering should not be overlooked, risking significant gaps in skilled labor.
By emphasizing the trade imbalances and the president’s goods-focused tariffs as retaliatory measures, this could serve as a negotiation strategy. If companies are compelled to maintain their manufacturing operations within the US, unintended severe consequences for the nation could arise.
Our digital economy necessitates ongoing investment in education, particularly in STEM disciplines. By undermining higher education and hindering them from achieving their objectives, he assures hurdles for our quality of life. The ultimate result could be a reduction in wealth, eventually leading to a burgeoning trade deficit as drops in educational contributions to the service trade surplus become evident.
International students may feel less inclined to pursue studies in the US amid ongoing uncertainties regarding visa statuses. For many, the safest choice could be to seek educational opportunities in Canada or Europe, dangerously impacting sectors like tech and medicine.
This trajectory is not inevitable. Meanwhile, elected representatives in both the House and Senate must act to safeguard not only their interests but also those of the entire nation. Without such measures, the risks will escalate while the advantages remain ambiguous.
What began as a tariff conflict and deportation of undocumented immigrants has evolved into a direct assault on what has established the United States as an attractive haven for global talent. Absent this allure, “Make America great again” morphs into a hollow and disappointing motto for many going forward.
Dr. Sheldon H. Jacobson is a professor of computer science at Grainger College of Engineering at the University of Illinois, Urbana-Champaign. He applies his expertise in risk-based analytics to tackle public policy challenges.
