Trade deficit with China skyrockets again

12 Sep '07

4 min read

The U.S. trade deficit totaled $59.245 billion for July 2007. The U.S. government also revised June's trade deficit upward from $58.1 billion to $59.4 billion. Including this month's revised slight drop, the overall U.S. trade deficit is down 7.85 percent this year compared to last. Nevertheless, the U.S. trade deficit is on track to hit approximately $724 billion in 2007.

The U.S. trade deficit with China in goods, however, jumped to $23.804 billion in July 2007, up 21.6 percent from the $19.572 billion deficit for July 2006.

“As long as China keeps cheating, the U.S. trade deficit with China will keep rising,” said American Manufacturing Trade Action Coalition (AMTAC) Executive Director Auggie Tantillo.

The overall U.S. trade deficit with China grew by $19.86 billion in the first six months of 2007. The January to July U.S. trade deficit with China in goods totals $141.305 billion, up from $121.444 billion for the same time period last year – an increase of 16.35 percent. At its current pace, the U.S. trade deficit with China in goods will approach $270 billion in 2007, dramatically up from last year's record of $232.5 billion.

In the sensitive U.S. government-defined sector of trade called Advanced Technology Products (ATP), the U.S. trade deficit with China was $36.634 billion for the first seven months of 2007. That figure was up from $29.515 billion for the first seven months of 2006, an increase of $7.119 billion (or 24.1 percent). At its current pace, the U.S. trade deficit with China in ATP is projected to run in the neighborhood of $68 billion for 2007.

“The U.S. trade deficit with China is spiraling out of control. China realizes that it can unfairly seize market share by heavily subsidizing industry and exports as long as the U.S. government and Congress fails to combat those predatory practices. This policy of negligent oversight is a prescription for more trade deficits and job losses,” Tantillo said.

“The Congress should stop focusing on job-killing trade agreements and gutting U.S. patent protections. Instead, it should focus on righting America's economic ship by enacting legislation that addresses the disadvantage to U.S. producers caused by foreign border-adjusted taxes and by currency manipulation,” Tantillo continued.

“The international trade playing field has been tilted against U.S. producers for too long. The predictable disastrous result has been the loss of more than three million middle-class manufacturing jobs. Something must change to reverse those losses,” Tantillo added.

VAT Fairness/Border Tax Equity Act - "Foreign border-adjusted taxes, mostly value-added (VAT) taxes, rebated on exports and imposed on imports disadvantaged U.S. producers by $294 billion and service providers by $85 billion in 2005. That's an estimated $379 billion disadvantage for just a single year. As for individual countries, the estimated disadvantage with China was almost $48 billion. All of those numbers have only grown since then. VAT fairness critically is needed," Tantillo stated.

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