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U.S. Exports Up, But China Deficit Remains Unchanged

By The U.S. monthly trade deficit in July dropped nearly 15 percent, according to a report issued by the U.S. Census Bureau and the U.S. Bureau of Economic Analysis. The report, released through the U.S. Department of Commerce, said that the total goods and services deficit for July was $42.8 billion, down from $49.8 billion in June.

Total U.S. exports for July were $153.3 billion, while imports stood at $196.1 billion. July exports rose $2.8 billion from the June level to $159. The improvement, the report said, was due to a drop in the goods deficit, which decreased by $7 billion from June to $55.2 billion; the services surplus was virtually unchanged at $12.5 billion.

The July increase in the export of goods included a growth of $2.3 billion in capital goods, a $500 million jump in other goods and a similar increase in industrial supplies and materials. Exports declined by $400 million in automotive vehicles, parts and engines. Foods, feeds and beverages and consumer goods were unchanged, the report said.

From June to July, imports of consumer goods declined $1.9 billion and automotive vehicles, parts and engines slipped by $700 million. Capital goods imports dropped by $600 million over the same period, while the imports of industrial supplies and materials; foods, feeds and beverages; and other goods experienced a decline of nearly $1 billion.

In the midst of this good news, though, was a discordant and troubling note. The U.S. trade deficit with China was $25.9 billion, making it the third month in the row that the U.S. trade deficit with that country broke the $20 billion barrier.

This persistent trade imbalance caused a number of organizations such as the Alliance for American Manufacturing (AAM) to renew calls for legislation to curtail China’s policy of keeping the exchange rate for its currency, the yuan, at what critics say is at an arbitrarily devalued level. Such actions are a characteristic of what is termed mercantilist policy.

“It’s always good news when the trade deficit narrows, but overall the deficit remains at an unsustainable level, and the trade deficit with China remains stubbornly high,” the AAM’s Scott Paul told BusinessNewsDaily. “Congress and the Administration can take concrete steps to dramatically reduce our trade deficit. First and foremost, China’s mercantilist exchange rate policy must be addressed head on. We are hopeful that both the House and Senate will pass meaningful China currency legislation before the end of the month.”

America is increasingly putting pressure of China to allow its currency to appreciate to a fair market value. On September 15, the House Ways & Means Committee will hold a hearing to review the currency issue and discuss pending legislation sponsored by Congressman Tim Ryan (D-OH), the Currency Fair Trade Act (H.R. 2378), that would punish China over the currency issue. Across the aisle, Sen. Charles Schumer (D-NY) is sponsoring companion legislation in the senate.

Ned Smith

Ned was senior writer at Sweeney Vesty, an international consulting firm, and was Vice President of communications for iQuest Analytics. Before that, he has been a web editor and managed the Internet and intranet sites for Citizens Communications. He began his journalism career as a police reporter with the Roanoke (Va.) Times, and was managing editor of American Way magazine and senior editor of Us. He was a Captain in the U.S. Air Force and has a masters in journalism from the University of Arizona.