U.S. Trade Deficit Worsens Big-Time Across Board as Obama Seeks Authority for New Deals
Wednesday, September 04, 2013
|Alan Tonelson is a Research Fellow at the U.S. Business & Industry Educational Foundation and the author of The Race to the Bottom: Why a Worldwide Worker Surplus and Uncontrolled Free Trade are Sinking American Living Standards (Westview Press).|
This morning’s trade data strongly debunk numerous claims portraying domestic U.S. manufacturing in renaissance mode mainly at the expense of a faltering China.
These new figures, representing the overall trade deficit’s biggest rebound in four years, will also compound doubts about the administration’s trade strategy just as Congress begins considering granting President Obama new trade negotiating authority, and the administration continues pursuing a trans-Pacific trade deal.
America’s chronic manufacturing trade deficit surged by nearly 34 percent in July, and at $62.08 billion, returned to levels typically seen during the previous decade’s economic bubble – when overall growth in the U.S. economy and in domestic industry was much higher than present rates. The nation’s volatile but longstanding trade shortfall in high tech goods exploded by nearly 147 percent, to an $8.30 billion total that represented a post-November, 2012 high.
The manufacturing and high tech goods deficits are both down on a year-to-date basis – by 0.54 percent and 16.20 percent, respectively. But increasingly, this improvement looks like a function of the continuing weak American economic recovery, not improved national competitiveness.
Despite widespread claims by the President and others that China is pricing itself out of U.S. and global markets, the manufacturing-dominated U.S. merchandise trade
deficit with China rebounded by 12.87 percent in July, to a new monthly record of $30.08 billion.
Although the Chinese economy is still growing much faster than America’s, U.S. goods exports
to the PRC actually dropped by 4.86 percent, to $8.74 billion, while U.S. goods imports rose by 8.34 percent, to $38.82 billion. Moreover, the U.S. merchandise trade deficit with allegedly over-priced China is running 1.94 percent ahead of last year’s record $315.1 billion level.
Whether in July or throughout the Obama years, America’s trade performance with other protectionist Asian rivals justifies no confidence that the President’s proposed Trans-Pacific Partnership or other Asian initiatives can serve U.S. interests any better than his predecessors’ ineffective measures.
The President has described his signature free trade
deal with Korea as a major job-creator for the employment-starved U.S. economy. But in July, the longstanding, manufacturing-dominated American goods deficit with Korea rose by more than 33 percent. U.S. merchandise exports to Korea fell in absolute terms by 0.77 percent, while the much greater volume of U.S. imports increased by 9.90 percent.
More important, since the Korea trade deal went into effect in March, 2012, the monthly U.S. goods deficit has nearly quadrupled – from $551 million to $2.15 billion. Despite the administration’s claims to have opened Korea’s heavily protected markets, U.S. goods sales to Korea are 17.44 percent lower on a monthly basis since the agreement was implemented, and America’s goods imports are 18.06 percent higher.
America’s trade performance with Japan, a new TPP participant, has been no better. In July, the U.S. merchandise trade deficit with Japan surged another 23.37 percent, to $6.81 billion. The administration continues to treat Japan’s recent campaign of currency manipulation as a simple domestic stimulus measure. But America’s goods exports to the immense Japanese economy fell by 8.90 percent in July, to $5.16 billion, and its goods imports increased by 7.04 percent, to $11/97 billion.
Moreover, since Japanese Prime Minister Abe’s yen weakening efforts began in January, the U.S. merchandise trade deficit has risen by 11.82 percent on a monthly basis, with U.S. goods exports practically flat-lining and U.S. goods imports increasing by 6.18 percent.
The July deterioration in the manufacturing, high tech, Japan, and Korea deficits was all much greater than the 13.33 percent worsening of the overall U.S. trade deficit, the 8.36 percent widening of the goods trade deficit, and the 10.70 percent increase in the non-oil goods deficit. Breaking with a recent trend, the petroleum trade deficit rose by 7.32 percent in July.
Also contributing strongly to the resurgent July trade deficit was a 78.80 percent jump in the U.S. merchandise shortfall with the economically troubled euro area. American goods exports to these countries collectively dropped by 3.14 percent, and goods imports rose by 18.83 percent.
Alan Tonelson is a Research Fellow at the U.S. Business & Industry Educational Foundation and the author of The Race to the Bottom: Why a Worldwide Worker Surplus and Uncontrolled Free Trade are Sinking American Living Standards (Westview Press).