President Donald Trump's threat to impose steep tariffs on Chinese exports to the U.S. would probably inflict a lot more harm on American consumers than it would on China.



To see why, you have to understand how Trump's policy apparently misreads the reasons the U.S. runs a trade deficit in the first place.

"Last year, we lost $500 billion on trade with China," Trump said, erroneously, at a March 23 news conference. "We can't let that happen."



To begin with, Trump's math is off — by more than $100 billion.

A trade deficit occurs when the value of imports is greater than the value of exports, in terms of both goods and services.



Last year, the U.S. imported roughly $505 billion of Chinese goods and shipped about $130 billion back, a difference of around $375 billion.



And Chinese-made products like his Apple iPhone, for example, represent a big part of that deficit, even though many of its most valuable parts come from other trading partners.



Some $70 billion of the U.S. trade deficit with China is from shipments of cellphones. But that $70 billion is not an accurate measure of the value China added to the cellphones it shipped to the U.S.



That's because the accounting used in the "official" trade statistics hasn't kept up with the growth of global supply chains, which source parts and raw materials from multiple countries to make a single product.



"About two-thirds of world trade now is involved in value chains that cross borders during the production process," said David Dollar, a senior fellow at the John L. Thornton China Center, in a blog post.



Each country that adds a link in the chain also adds a little value to the final product. But those intermediate contributions are rolled up into the final export value that tallied when the product reaches its final destination. As a result, much of that $70 billion U.S.-China cellphone trade deficit really comes from other U.S. trade partners, such as South Korea, Japan and Singapore.



To better understand why that happens, all Trump has to do is take a closer look at his iPhone the next time he tweets.