The November trade deficit held steady in November, dropping by $0.1 billion from October. However, a big jump in exports of pharmaceuticals, coupled with a big drop in imports of the same, masks an overall worsening of the trade deficit. Pharma exports rose by $1.0 billion in November while imports of the same fell by $0.9 billion. Take away this $1.9 billion improvement in the balance of trade in pharmaceuticals and the balance of trade in non-petroleum goods worsened by $1.4 billion.
Each month there seems to be some fluke that is capping the trade deficit at around $40 billion. This month it’s pharmaceuticals. Last month it was an anomaly in oil and food. The bad news is that there’s no real improvement where jobs are concentrated – in manufactured products.
Here’s an update to my charts of trade and the progress toward meeting Obama’s goal of doubling exports in five years.
While exports are tracking pretty close to (but below) that goal, the trade deficit hasn’t budged. Imports have risen just as fast. The end result is that unemployment holds steady at historically high levels.
I’ve said it before, often, but it bears repeating: the U.S. can’t export its way out of its trade deficit. The only way is to completely abandon its commitment to the blind application of free trade theory and return to the sensible and targeted use of tariffs to assure a balance of trade.