The Department of Commerce announced Feb. 14 that the overall U.S. trade deficit dropped 6 percent in 2007 on the strength of increased exports. However, the politically sensitive U.S. trade deficit with China rose 10 percent, prompting a group of lawmakers to renew their call for action against China’s exchange rate regime.
According to the Census Bureau and the Bureau of Economic Analysis, the U.S. goods and services trade deficit shrank to $711.6 billion in 2007, a $46.9 billion drop from a year earlier. Total exports increased $176.1 billion to $1.62 trillion while imports rose $129.2 billion to $2.33 trillion. Goods exports were $1.15 trillion and imports were $1.96 trillion, resulting in a goods deficit of $815.6 billion, $22.7 billion less than in 2006. Services exports were $472.5 billion and imports were $368.5 billion, yielding a $104 billion services surplus that was $24.2 billion greater than in 2006.
While the overall deficit dropped, the goods deficit with China increased from $232.6 billion in 2006 to $256.3 billion in 2007. U.S. exports to China increased $10.1 billion to $65.2 billion and were led by soybeans, civilian aircraft and industrial machines. However, imports increased $33.7 billion to $321.5 billion, primarily computers, toys, games and sporting goods, telecommunications equipment and apparel. Deficits with other major trading partners declined; the U.S. goods trade deficit with Canada dropped from $71.8 billion in 2006 to $64.2 billion in 2007 while the deficit with the European Union fell from $116.5 billion to $107.4 billion.
News of the 10 percent increase in the U.S. trade deficit with China prompted a bipartisan group of lawmakers to renew their calls for action against “countries that unfairly manipulate their currencies,” according to a press release from Rep. Tim Ryan, D-Ohio. Ryan is among those sponsoring legislation that would impose countervailing duties on “goods from other countries that are given unfair advantages due to currency imbalance,” the press release said. This bill “only asks China to live up to the standards it agreed to when it joined the WTO,” Ryan said.
The DOC statistics also indicate that the U.S. monthly trade deficit declined by $4.3 billion in December to $58.8 billion. This includes a goods deficit that decreased $4.6 billion from November to $68.2 billion and a services surplus that edged down $0.2 billion to $9.5 billion. December exports increased $2.2 billion to $144.3 billion and imports decreased $2.2 billion to $203.1 billion. The December goods and services trade deficit was down $1.5 billion from a year earlier, during which time exports increased by $17.2 billion or 13.6 percent while imports saw a $15.7 billion or 8.4 percent rise.
The U.S. had trade surpluses in December with (in billions of dollars) Hong Kong ($1.1), Singapore ($1.0), Australia ($0.9), Brazil ($0.6) and Egypt ($0.3). Deficits were recorded with China ($18.8), Europe ($9.2), Japan ($6.6), Mexico ($6.5), Canada ($4.7), Korea ($0.4) and Taiwan ($0.3).
World Trade/Interactive
