Breaking records is normally a good thing, but not when it comes to trade deficits.
The trade debate is burning in Washington, D.C. Both the House of Representatives and the Senate advanced versions of the trade promotion authority (TPA) bill last month. TPA will give the president the ability to negotiate and complete the proposed Trans-Pacific Partnership (TPP).
And this morning, new trade figures added fuel to the fire.
The overall monthly U.S. international goods and services trade deficit grew to $51.4 billion in March, up from $27.3 billion in February – marking the largest monthly expansion in the trade deficit since December 1996.
And that’s not the only record breaker in this report:
- The highest-ever monthly U.S. good deficit with China was recorded at $37.8 billion in March.
- March saw the largest monthly trade deficit since October 2008 and the highest trade deficit in goods since August 2008.
“Now we know what caused the drop in manufacturing jobs in March. A surging trade deficit cuts into GDP growth, displaces factory jobs, and should inform the trade debate.” – Scott Paul, Alliance for American Manufacturing
Oh, did we forget to mention that the trade deficit with Japan, the other lead country in TPP negotiations, increased to $6.3 billion in March, with imports increasing by $2.2 billion? Currency manipulation is the leading cause of our growing trade deficit with Japan.
Provisions to combat currency manipulation are not included in the current TPP and TPA proposals. And that’s bad news for American manufacturers and workers. As we’ve said countless times, American workers can out-compete anyone in the world. But the rules of trade must be fair.
That’s why it is so important that policymakers get it right in new trade agreements, and why it is so important they hold our trading partners accountable when they cheat.