The increase included boosts in purchases of things we can’t make here anymore, like cellphones and computers, as well as sneakers and home furnishings. This increase in purchases shows that the U.S. economy might be improving.
Imports were up 1.6 percent in May to a seasonally adjusted $223.5 billion. Exports fell 0.2 percent to $182.4 billion, partly because the strong dollar makes American products pricey. Our goods deficit was $62.2 billion, the services surplus was $21.1 billion.
Our trade deficit with China was up $1.7 billion to $28.3 billion for the month with exports down $0.1 billion to $9.3 billion and imports up $1.6 billion to $37.6 billion.
Trade Deficit Cuts Jobs And Wages
A trade deficit occurs when we buy more from outside our country than we sell. This means fewer people are making and doing things here. If this is an ongoing situation the country drains jobs and growth possibilities, and loses key parts of our manufacturing ecosystem.
We have had a trade deficit every year since Wall Street and giant corporations launched an effort to sell “free trade” ideology in the late 1970s.
This is the same time frame as American wages stagnated, economic gains started shifting to the top few and inequality began to increase.
These are real effects of a real trade deficit that real people in the U.S. are really feeling.
Republican presidential near-nominee Donald Trump made trade and the trade deficit the centerpiece of his campaign, saying things like,
“We got here because we switched from a policy of Americanism – focusing on what’s good for America’s middle class – to a policy of globalism, focusing on how to make money for large corporations who can move their wealth and workers to foreign countries all to the detriment of the American worker and the American economy.”
Massive trade deficits subtract directly from our gross domestic product.
From 1947 to 2001 – a span of over five decades – our inflation-adjusted gross domestic product grew at a rate of 3.5 percent.
However, since 2002 – the year after we fully opened our markets to Chinese imports – that GDP growth rate has been cut almost in half.
What does this mean for Americans? For every one percent of GDP growth we fail to generate in any given year, we also fail to create over one million jobs.
America’s “job creation deficit” due to slower growth since 2002 is well over 20 million jobs – and that’s just about the number of jobs our country needs right now to put America back to work at decent wages.
Unfortunately these enormous, humongous trade deficits help bolster his case. Martin Crutsinger of AP explains how, in Chinese Imports Push Up US Trade Deficit In May,
Presumptive Republican presidential nominee Donald Trump has accused the Obama administration of failing to protect U.S. workers from unfair trade practices in China and other countries.
Trump has sought to tap into the economic anxiety of Americans who have seen jobs disappear in an increasingly global economy. In a recent trade speech, Trump said he would exit from the North American Free Trade Agreement with Canada and Mexico if it was not renegotiated, kill the pending Trans-Pacific Partnership trade agreement and take a more aggressive approach to China’s trade practices, which he said were costing American jobs.
The Trans-Pacific Partnership (TPP) would open up tariff-free trade with countries like Vietnam, which can only increase the “giant sucking sound” of US job loss and increasing trade deficits. Democrats have an opportunity to blunt Trump’s message by putting a plank in the party platform opposing passage of TPP.