Enormous, Humongous May Trade Deficit Slows Economy
The U.S. Census Bureau reported Tuesday that the May goods and services trade deficit was an enormous, humongous $40.9 billion, up a bit from an enormous, humongous $40.7 billion in April.
Our enormous, humongous trade deficit is a measure of how many jobs, factories, companies and industries we are losing to our pro-Wall Street trade policies. A trade deficit drains our economy of wealth, jobs and future economic opportunity.
Here’s the AP via The New York Times, “U.S. Trade Deficit Widens in May as Exports Struggle“:
Trade slashed nearly 2 percentage points off growth during the first three months of the year. The big drag from trade combined with an unusually severe winter sent the economy into reverse, contracting at an annual rate of 0.2 percent in the January-March period.
May imports were $230.5 billion, which was $0.3 billion less than April imports, and exports were $188.6 billion, down $1.5 billion from April.
The May goods deficit (factory jobs) was $61.5 billion.
The monthly U.S. goods deficit (factory jobs) with China increased in May to $30.6 billion, from $26.5 billion in April.
The U.S. goods deficit (factory jobs) with Japan was $6.4 billion in May.
The U.S. goods deficit (factory jobs) with South Korea was $2.4 billion in May.
Trade Deficit, Trade Policies Hurting Economy
When you close a factory in the U.S., move the jobs and production to a low-wage, low-democracy country, and bring the same goods back to the U.S. to sell in the same stores this “increases cross-border trade.” But since this trade is going in one direction, it also increases our trade deficit, which hurts our economy. Moving the jobs to places where the workers are exploited means that a few investors and executives can pocket the difference in what is paid in wages and environmental protection costs, while impoverishing the workers and communities on all sides of the trade borders.
And to top it off, the U.S. doesn’t even make these companies pay their taxes, so we literally get nothing back for the lost jobs and wages.
Our trade policies encourage companies to make things outside of the U.S. We have dropped tariffs on goods from countries that exploit workers, which encourages companies to move production to these countries so investors and executives can pocket the resulting wage differential. This makes our democracy into a competitive disadvantage in world markets.
Our tax policies also encourage production to move out of the country. Companies that make profits outside the U.S. can dodge taxes by keeping the profits out of the U.S. This encourages companies to transfer production out of the U.S. and import in ways that make it appear the profit is made elsewhere.
The U.S. also has a strong dollar policy. The U.S. dollar is “strong” which means that things made in the U.S. cost more in international markets than things made in countries with “weak” currencies. A strong dollar is great for those who already have money and want to buy things like imports, but terrible for those who need to make money by selling things.
TPP Will Make It Worse
The upcoming Trans-Pacific Partnership (TPP) is a huge trade and corporate-rights agreement being negotiated between the U.S. and 11 other countries. One example of the trade effect of this agreement (which is mostly not a trade agreement) is the competition between athletic shoe companies Nike and New Balance. Nike makes shoes outside the U.S. in countries like Vietnam. New Balance is still trying to make some of its shoes in the U.S. If TPP drops a tariff on shoes from countries like Vietnam, Nike’s profits from making things outside the U.S. will increase, putting New Balance at a competitive disadvantage that could force it to stop making shoes in the U.S.
TPP and other upcoming corporate-rights agreements were recently “fast-tracked” by the Congress – even though TPP is still secret. By fast-tracking, Congress agrees in advance not to “meddle” with the corporate-negotiated agreements, meaning that anything called a trade agreement is essentially preapproved, no matter what is in them. Congress cannot amend the agreement, can’t filibuster it, has to abide by limits to the floor debate and must pass the agreements in a limited time, which keeps the public from getting involved.
Word is that TPP negotiations will be completed at the end of July. This could throw it to Congress right in the midst of the Christmas diversion season.
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This has been reposted from the Campaign for America's Future.
