That premise underpinned President Donald Trump’s bellicose statements on trade at the G7 leadership summit in Quebec, which climaxed with the stunning threat that the U.S. could “stop trading” with some countries.

The threat could seem justified if it were true that the U.S. were actually “losing” such a huge amount on trade. But it’s a flawed and even deceptive claim on multiple levels, most trade experts agree. And the speech as a whole, with its further heightening of Trump’s protectionist ethos, has set off an instant wave of anxiety among economists.

The amount of money Trump is saying the U.S. “lost” is the trade deficit – the amount by which the goods and services Americans bought internationally exceeds the amount they sold to other countries. But the number he’s citing is itself is fundamentally inaccurate. Trump has previously cited an $800 billion trade deficit more than 50 times, according to the New York Times. But whether $800 billion or $817 billion, Trump’s number only includes trade in goods, excluding services. That distortion seems to represent a belief within the administration that manufacturing and farming are inherently better economic activities than providing services. This ethos would seem to align with the concerns of Trump’s domestic political base.

But it doesn’t match the reality of America’s position as a global leader in high-value services including finance, engineering, education, and telecommunications. In fact, the U.S. has a global surplus in service exports – Americans sell more to other countries than they buy from them. Once they’re added back to the tally, the overall U.S. trade deficit drops to $566 billion – 30% lower than Trump’s number. In some specific countries, such as Canada, Trump can only claim there’s a bilateral trade deficit at all because his numbers exclude services. In reality, the U.S. has a trade surplus with Canada.

That sort of distortion matters because Trump has shown he’s willing to act on it, including with recent tariffs on Canadian goods that only make even nominal sense through the lens of his misleading metrics. Though Canada has so far imposed retaliatory tariffs only on American goods, restrictions on the trade in services could have serious negative impacts in the U.S. Global demand for American services has been growing fast, and a lot of it is filled by smaller businesses that would be hurt by foreign restrictions.

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Trump has already given a preview of what that might look like by way of a sharp drop in U.S. university enrollment by international students, which are counted as a U.S. export. That drop has been partly blamed on Trump’s tightening of immigration policy and his harsh anti-immigrant rhetoric. Universities are economic anchors of American communities of all sizes, and declining foreign revenues are beginning to force job cuts, particularly at smaller schools in the Midwest. Some of the missing students, notably, are choosing to go to Canada instead.

But ignoring services isn’t the only problem here – Trump’s obsession with the trade deficit seems to be based on some misunderstanding of what that metric truly represents. Trump’s belief that America “loses” the amount of trade deficit is not true. Deficits are financed partly by loans from abroad, which do result in interest payments to foreign countries. But a lot of that money circulates through the broader global economy, increasing stability and prosperity, including in the many countries, including Brazil and Australia, where the U.S. has a trade surplus. Some of it also comes back to the U.S. as foreign investment. According to conservative economic analyst Veronique de Rugy, that means that a portion of the U.S. trade deficit actually goes to create jobs and improve infrastructure in America. The trade deficit can also in some sense be seen as a sign of American success, since it’s underpinned by a strong dollar, and tends to rise during periods of economic growth.

Really, really bad. Trump is throwing a temper tantrum, threatening dire retaliation against our allies for high tariffs THAT DON'T EXIST. You can't reach a deal with someone who demands you stop doing something you aren't doing 1/ https://t.co/xGjrqY9fgk

— Paul Krugman (@paulkrugman) June 9, 2018

It's sort of the trade equivalent of basing immigration policy on a crime wave by undocumented immigrants that exists only in Trump's fevered racist imagination. But unlike little kids torn from their parents, major economies can and will strike back 2/

— Paul Krugman (@paulkrugman) June 9, 2018

The intellectual basis for this tantrum, to the extent there is one, is a basic misunderstanding of how VATs work. But Trump will never admit that he was wrong, and was listening to the wrong people. Right now, corporate America should be terrified 3/

— Paul Krugman (@paulkrugman) June 9, 2018

Finally, even if reversing the trade deficit was a worthy priority, many economists question whether Trump’s desired “trade war” is the way to make it happen. The tariffs and subsidies that Trump says other countries have imposed on the U.S. don’t play a primary role in setting the trade balance, so imposing tariffs on the U.S. side will lead to chaos rather than rebalancing. At the same time, a great deal of the trade deficit is made possible by U.S. government deficit spending, so reining that in could actually reduce the trade deficit. Instead, Trump’s recent tax cuts will massively expand government borrowing.

Trump’s skewed understanding of the trade deficit is at the heart of his stance on global trade and its role in American prosperity. We’re already beginning to see some of the impacts of those misunderstandings, including in a nervous stock market that has been marching in place for nearly six months. According to some, there’s still worse to come: Nobel-winning economist Paul Krugman’s response to the speech concluded with the warning that “Right now, corporate America should be terrified.”