The US trade deficit is huge while countries such as Germany and Japan have big surpluses. In 1970 the US had a trade surplus of $ 2.2 billion, what has gone wrong?

The american trade deficit in goods and services soared to an all-time high of $716.7 billion in 2005, pushed upward by record imports of oil, food, cars and other consumer goods. In 2005 the gap between what America sold abroad and what it imported rose 17.5% from the previous record of $617.6 billion set in 2004. But there is more pain. The trade deficit was $378.2 billion in 2000 and just $96.3 billion in 1995.

As you see, the trade balance has worsened. It has no precedents in world history. And it has been growing exponentially. This deficit could surpass $1 trillion in a few years. It will have dramatic consequences.

Many companies and workers have been affected by this. Countries with cheaper labor costs will leave many americans unemployed. The manufacturing jobs that are exported to poor countries are replaced by jobs in the services sector that pay less. The fact is that fast-food restaurants do not pay as much as the car industry. Since mid-2000 the US has lost nearly 3 million manufacturing jobs. I can not deny that those losses are in great part because of a higher productivity but also because of the growing deficit.

Today, United States has slightly more than 14 million workers in the manufacturing sector. Japan has more than 11 million workers in the same sector. This is about 80% of the number of workers that U.S. has in the manufacturing but Japan has just 43% of the population of United States. This means that the percentage of japaneses in the manufacturing is of far higher than in U.S. Many rich countries have a higher percentage of workers in the manufacturing than United States.

Remember the 80s? There were many articles about the growing Japanese exports to America. That Asian country had a big surplus. The American deficit with Japan was around $50 billion and it became a headache. The politicians and businessmen complained about it. However even those years were great compared with the present time. The US trade deficit with China has grown exponentially. It was just $6 million in 1985. It increased to $10.4 billion in 1990. It grew to $201.6 billion in 2005. It could be 10% higher in 2006.

The American trade deficit with Canada jumped from $5.9 billion in 1991 to $78.4 billion in 2005. In 1991 U.S. had a deficit of $4.8 billion with Germany. It grew to $50.5 billion in 2005.

The trade deficit was $58.9 billion in October. The U.S. trade deficit with China widened to a record $24.4 billion in October from $20.4 billion in the same month last year and $22.3 billion in September. The trade gap with China rose to $190.6 billion in the first ten months of the year, up from $166.8 billion in the same period last year.

We oppose the policies of manipulating the currencies to take advantage of the United States or the lack of reciprocity in trade ties. The currencies must not be undervalued, so, the goods and services produced by a nation will have their real costs. This way countries will not be able to flood the american market with cheap imports and at the same time those countries will have more purchasing power to buy American goods, this way the deficit will be corrected.

[Edited by Simon – Typos, grammer, and removed the spam advertising]

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