I'm a student on F-1. I don't know how to claim the tax treaty benefit on the 1040-NR form. Should I subtract the treaty benefit ($5000) from total W-2 wages/tips/salaries and THEN enter it on the form?

Read the Form 1040NR instructions.

You debit the wages on Box #1 of the W-2 by the $5,000 treaty exemption, and enter what's left on the WAGE line of Form 1040NR.