The 2020 Mid-Year Economic Update_long

Soaring Trade Deficit ‘Deeply Troubling’

MAPI economist laments growing deficit and accompanying trade-related job loss.
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The U.S. trade deficit swelled nearly $3 billion to $43.8 billion in June, which is "deeply troubling" to Ernest Preeg, senior adviser for international trade and finance at the Manufacturers Alliance for Productivity and Innovation.

June exports were $188.6 billion and imports were $232.4 billion, according to the U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, resulting in a trade deficit increase of 7 percent.

The full-year picture is gloomier. From January to June, U.S. exports of manufactures were down by 1 percent, imports were up by 5 percent and the deficit soared by $48 billion, or 19 percent, compared with the same period a year ago. The labor dispute at West Coast ports disrupted imports and exports earlier in 2015, and the strong U.S. dollar has presented a more severe and persistent headwind for the deficit.

The latest report "completes a devastating first half of 2015 for U.S. trade competitiveness in the technology-intensive manufacturing sector that accounts for 75 percent of U.S. merchandise exports," Preeg said in comments released ahead of MAPI's full report on the deficit.

"This increase in the deficit equates to a trade-related loss of over 300,000 American manufacturing jobs during the first half of 2015, and accelerates the pace of job losses over the past five years, which resulted in job losses of 2 million," he said.

Meanwhile, China's global trade surplus in manufactures during the first half of the year also soared, by $59 billion, or 14 percent. Sixty percent of the U.S. global trade deficit is with China.

"This is an important and deeply troubling issue," Preeg said, adding that he hoped the topic would arise during last week's Republican presidential debate – but it never came up.

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