As evidenced by April’s trade figures, released on Thursday by the U.S. Bureau of Economic Analysis (BEA), Obama’s strategy of rebalancing trade by doubling exports in the next five years is going nowhere fast. The trade deficit in April inched up to its highest level since December of 2008, rising $0.2 billion to $40.3 billion. (Here’s a link to the BEA report.)
Though Obama’s goal of doubling exports in five years is more or less on track (though falling slightly behind in April), imports continue to outpace exports, driving the deficit higher. The following are charts of exports vs. Obama’s goal, imports and the balance of trade.
U.S. trade remains stuck in a rut, which corroborates other economic indicators, especially employment data, that have shown no improvement at all. Give Obama credit for recognizing that rebalancing trade is critical to rejuvenating the economy, but give him a big, fat “F” for the strategy he’s chosen – taking no action on imports, the only factor over which he has control, while trying to jawbone other nations into importing more American-made products, something he has no control over whatsoever. It doesn’t work.
Recently, follwing the March release of trade data that showed China’s surplus with the U.S. At a relatively modest $16.9 billion, U.S. Treasury Secretary Tim Geithner praised China for their progress in rebalancing trade. So what happened in April? Our deficit with China shot up to $19.3 billion, resuming its upward climb to pre-recession record levels.
This trade strategy – trying to coax other nations to buy more from us, to live up to their obligations, to stop manipulating their currencies, etc. – has been a proven failure for decades and now Obama’s finding out that it’s a failure for him as well. Will he stick with it or just go down with the ship? History suggests he’s not likely to change course.