Oh boy, here come the 2013 trade numbers!
America’s trade balance will get an update this Thursday when the Department of Commerce releases its monthly report.
But this is no ordinary data dump, oh no. Commerce’s report comes two months late, meaning that this week’s numbers will reflect trade data for December 2013. We’ll have a full set of trade data for last year. And a new record trade deficit with China.
But first, let’s take in a little historical context.
It was the year 2000. Erin Brockovich was in theaters, and Blink-182 was the popular music with your ungrateful teenage kids. Lawmakers in Washington, in an exhibition of bipartisan bonhomie, granted the Chinese government what’s called permanent normalized trade relations (PNTR) status. PNTR is coveted; if a country has this, it won’t face the threat of “policy uncertainty.” Essentially, China wouldn’t face the threat of tariffs year in and out. PNTR solidified its trading status. As reported in Marketwatch about a year ago:
The constant threat of tariffs –- basically a tax on imported goods -– largely ended in 2000. The Clinton White House and Republican-led Congress agreed to grant China the permanent right to be treated like other U.S. trading partners such as Europe or Japan. While tariffs can still be applied, the process is more complicated and takes longer to deploy, sometimes involving U.S. or international court hearings.
So! In 2001, America’s trade deficit (how much we export subtracted from how much we import) with China was $83 billion.
Does that sound like a lot? By 2004, it was $162 billion. By 2007, it was $258.5 billion. It dipped to only (only!) $227 billion in 2009 as the great recession almost put the economy into septic shock and consumer spending plummeted. But in 2010 it was $273 billion, in ’11 it was $295 billion, and in 2012 it was a record $315 billion.
The rising trade deficit and the corresponding loss of manufacturing employment has resulted in a downward pressure on wages. Manufacturing jobs pay well -- 16 percent higher than average wages -- noted the Economic Policy Institute (EPI) in a recent paper. But newly unemployed manufacturing workers haven’t found the same kind of pay out there in the rest of the economy. Therefore, says EPI's Robert E. Scott, America’s collective paycheck has been billions of dollars lighter:
Even when reemployed in nontraded industries (industries that do not involve traded goods), the 2.7 million workers displaced by growing U.S. trade deficits with China lost $13,505 per worker in 2011 alone. For all displaced workers, using education group averages, net wage losses totaled $37.0 billion per year.
So what does all of this have to say about Thursday’s trade data?
Through November, America’s trade deficit for 2013, with China was $293 billion. That means with only (only!) another monthly deficit anywhere north of $22 billion, we’ll have another record annual trade deficit.
At least we've gotten a lot of low, low prices out of our trade arrangement with China. Maybe we can get one of those ironic slow claps going before Thursday?
Take it away, Orson Welles:
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