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Although the new monthly June trade figures revealed improvements in most trade flows heavily affected by free trade deals and other trade policies (e.g., non-oil goods, manufacturing, high tech products, Korea), they also showed American competitiveness faltering longer term in all these measures – along with China trade. Until these U.S. policy-influenced trade deficits start falling, and thus boosting the recovery on net rather than slowing it, Congress should deny President Obama renewed authority to negotiate new trade deals.
Here are the highlights of this morning’s Census Bureau report:
>The headline monthly trade deficit in June fell 6.99 percent, from an upwardly revised $44.66 billion to $41.54 billion – the second lowest total this year.
>The inflation-adjusted deficit in goods other than oil – the trade account most affected by U.S. trade policies – shrank in June from $49.04 billion to $46.73 billion, or 4.71 percent. But when released last month, the May total represented an all-time U.S. record, and has been revised even higher in the latest figures.
>Year-to-date, this real non-oil goods deficit – which also helps comprise the headline gross domestic product number – has risen 13.62 percent, from $237.7 billion to $270.17 billion.
>As a result, the trade deficit influenced strongly by trade policy continues to slow the recovery – and by extension, job creation – substantially
>Consistent with this pattern, although the overall current-dollar June trade deficit fell on a monthly basis, the total brought the year-to-date figure to $260.05 billion – 4.97 percent higher than the January-to-June, 2013 deficit. During the same period from 2012 to 2013, this trade shortfall had plunged by 14.07 percent.
>Total pre-inflation goods and services exports rose by 0.13 percent in June, to a new monthly record of $195.86 billion, and so far are up more on a year-to-date basis this year (2.77 percent) than last (2.36 percent).
>But although combined pre-inflation goods and services imports fell by 1.19 percent in June on a monthly basis (to $237.40 billion), year-to-date they have grown by 3.54 percent, after decreasing by 0.99 percent between the first half of 2012 and the first half of 2013.
>Nor could a monthly decline in the manufacturing trade deficit greatly slow the ongoing worsening in the nation’s manufacturing trade performance. The monthly shortfall decreased by 3.24 percent in June, from $62.24 billion to $60.11 billion, as imports fell faster (1.47 percent) than exports (0.29 percent).
>Year-to-date, however, the manufacturing trade deficit is 11.80 percent higher than last year’s comparable level – which eventually produced a new record annual manufacturing trade deficit of $646.77 billion. And manufacturing exports year-to-date are up a negligible 0.44 percent, versus a 4.30 percent increase in imports.
>In high tech goods, the monthly U.S. trade deficit fell in June by 1.47 percent, from $7.59 billion to $7.45 billion, as the growth in exports outpaced the increase in imports. On a January-to-June basis, however, this trade gap is up 1.58 percent, to $35.21 billion, after plummeting by 17.50 percent from the first half of 2012 to the first half of 2013.
>America’s immense goods trade deficit with China rose by 4.48 percent between May and June to $30.06 billion – just under the record $30.47 billion total of September, 2013. U.S. goods exports to the still strongly growing Chinese economy increased by 1.42 percent on month, but the much greater amount of U.S. goods imports grew by 3.73 percent.
>On a year-to-date basis, the U.S. goods deficit with China is up 4.94 percent from last year’s pace, which produced an annual record trade gap of $318.71 billion.
>In contrast to the China deficit, the monthly goods trade gap with new U.S. free trade partner Korea nosedived by 30.00 percent from May to June, from $2.68 billion to $1.87 billion. U.S. goods exports to Korea increased by 8.41 percent on month, while imports sank by 7.99 percent.
>Year-to-date, the U.S. goods deficit with Korea has actually fallen slightly, from $11.05 billion to $11.01 billion. On a monthly basis, however, the gap is still up more than 240 percent, from $551 million in March, 2012, when the KORUS free trade agreement went into effect.
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