Trade Deficits, Exports, the China Angle and Recovery

By July 14, 2010Trade

More from the news coverage on yesterday’s trade numbers for May.

USA TODAY, “Rising trade deficit could drag down U.S. recovery“:

Prospects for dramatic export gains are cloudy. The European economy is near flat, and while growth in emerging markets is more robust, it is driven by exporting, not buying other countries’ products. “Europe and Japan are not doing all that well,” said Frank Vargo, vice president of the National Association of Manufacturers.

NAM’s biggest complaint, however, is with the Chinese. Through May, the U.S. ran a $93.3 billion deficit in its trade with China, up from $84.6 billion during the same period last year. China only recently resumed allowing its currency to trade in a broader range against the dollar. Many U.S. companies say the undervalued renminbi, or yuan, gives Chinese products an edge in world markets.

Lexington Herald-Leader, “Trade deficit growth ignites doubts on economic rebound

American purchases of foreign-made computers, cars and consumer goods increased considerably in May. The deficit with China, which had eased during the recession and early part of the recovery, is now rising again and was a major factor in the higher trade gap in May.

For the first five months of the year, the trade deficit totaled $197.8 billion – a 38 percent increase from the January to May period of 2009. In manufactured goods, China accounted for more than 70 percent of the shortfall.

“The best answer is for China to move faster on its currency (appreciation) and … make their market easier for the U.S. to sell into,” said Frank Vargo, vice president for international economic affairs at the National Association of Manufacturers.

The NAM’s David Huether, our chief economist, commented on the trade figures Tuesday.

Join the discussion One Comment

Leave a Reply