WASHINGTON, DC-Following the Commerce Department report on February 14 that the U.S. trade balance shrank by $46 billion in 2007, its largest improvement in 16 years, the National Association of Manufacturers’ (NAM) Vice President for International Economic Affairs Frank Vargo issued the following statement:
Manufactured goods made up 60% of this improvement and continue to be the largest factor in U.S. trade. For the first time in seven years we are seeing the manufactured goods deficit grow smaller.
The improvement in manufactured goods trade was due to the growth of U.S. exports, which increased at nearly twice the pace of imports last year.
The return of the dollar to its level of the 1990s played a key role. US prices are once again competitive in world markets. This is particularly notable in the improvement in our manufactured goods trade with Europe and Canada.
Another key factor is our trade balance with our free trade partners. For the third year in a row, the combined manufactured goods trade deficit with NAFTA, CAFTA, Chile, Australia and all our other free trade partners shrunk and now accounts for only 3% of our trade deficit.
Given the slowdown in the domestic economy, the surge in exports has proved very timely. In fact, export growth offset much of the decline in residential investment last year.
Unfortunately, the US manufactured goods deficit with China grew about $30 billion last year and now accounts for over half of our total manufactured goods trade deficit. China must accelerate its currency appreciation; while the 15% so far is significant, more change is needed. China also needs to act more quickly on protecting intellectual property, cutting its subsidies and ensuring the quality of its exports.