As President Obama’s trade agenda heads to Congress, new government figures show numerous U.S. trade deficits in trade policy-sensitive areas hit new annual or monthly records in 2014, including China, manufacturing, Korea and non-oil goods in both inflation- and non-inflation-adjusted terms. Since all deficit deterioration reduces U.S. growth and hiring, Congress should reject the President’s proposed new deals, as well as his request for new fast track negotiating authority, and focus on devising a new trade strategy that will strengthen, not weaken, the recovery and job creation.
Here are the highlights of this morning’s Census Bureau report on December and full-year 2014 U.S. Trade:
>The combined U.S. goods and services trade deficit surged in December by 17.12 percent on a monthly basis – the biggest such increase since the 24.36 percent rise in July, 2009, at the very beginning of the current economic recovery. The $6.81 billion deterioration, from an upwardly revised $39.75 billion to $46.56 billion, was also the biggest absolute increase on record.
>The December deficit, the highest monthly figure of 2014 and the worst since November, 2012, pushed the annual goods and services shortfall in 2014 to $505.05 billion – 6.02 percent higher than 2013’s total of $476.39 billion.
>The U.S. merchandise trade deficit with China fell by 5.47 percent in December, but the $28.30 billion gap brought the annual shortfall to a new record $342.63 billion – 7.51 percent higher than the previous record of $318.71 billion, set in 2013. U.S. goods exports to China increased only by 1.88 percent on year, the slowest rate since the recession year 2009.
>The U.S. trade gap in manufacturing hit a new all-time high in 2014 as well. The monthly deficit increased by 5.34 percent in December, from $62.47 billion to $65.81 billion, bringing the annual shortfall to $733.90 billion. That figure topped 2013’s then-record deficit of $646.77 billion by 13.47 percent.
>U.S. manufacturing exports rose by only 0.85 percent last year, to $1.19338 trillion.
>America’s merchandise trade deficit with new free trade partner Korea decreased by 20.72 percent in December, with the $2.224 billion total representing the smallest since August. But the annual deficit worsened by 21.24 percent, to a new record $25.06 billion. In 2012, when the deal went into effect (in March), the U.S. Merchandise deficit was $16.64 billion. The Obama administration calls the U.S.-Korea Free Trade Agreement its model for the proposed Trans-Pacific Partnership (TPP).
>U.S. goods exports to Korea rose by 6.78 percent from 2013 to 2014, but the much larger amount of merchandise imports increased by 11.57 percent.
>Since 2012, U.S. merchandise exports to Korea are up only 5.39 percent, while American imports have risen by 18.17 percent, meaning that the goods deficit has increased by 50.65 percent.
>The U.S. non-oil goods deficit also hit monthly and annual records both before and after inflation. The inflation-adjusted non-oil figure is especially important, since it is part of the real gross domestic product calculation. And both figures represent that portion of U.S. trade flows that are significantly shaped by the kinds of trade agreements, and other trade policy decisions, that Congress is likely to consider this spring.
>The December inflation-adjusted non-oil goods trade deficit of $49.98 billion was the highest monthly total on record. Because this figure has been strong all year, the annual 2014 total of $551.80 billion was also the biggest ever recorded.
>By contrast, the full-year 2014 inflation-adjusted oil deficit of $114.01 billion beat 2013’s previous record low of $132.20 billion by 13.76 percent. This trade shortfall has dropped annually since 2005.
>Before inflation, the U.S. oil trade deficit in December rose on a monthly basis by 27.05 percent, from $11.59 billion to $14.72 billion. But on an annual basis, this trade deficit decreased by 18.65 percent, from $232.13 billion to $188.84 billion – the lowest level since the recession year 2009.
>Overall, U.S. goods and services exports fell in December by 0.78 percent, from $196.43 billion in November to $194.88 billion, the lowest monthly total since April.
>For the full year, combined U.S. exports increased by 2.86 percent, to a new all-time high of 2.345424 trillion from 2013’s $2.280194 trillion.
>U.S. total imports hit a new annual record, too – $2.850471 trillion. That performance topped the previous record of $2.756586 billion, set in 2013, by 3.41 percent. On a monthly basis, combined American imports increased by 2.23 percent in December, to an $244.44 billion – another all-time high.