Benn Steil


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It’s (Almost) All Good on U.S. Trade Imbalances – China Remains Exception

January 19, 2011

The yearly U.S. trade deficit peaked at 6.4% of GDP in August 2006. It improved significantly after the financial crisis, bottoming out at 3.6% in January 2010. This swing provided a boost to GDP and nudged the U.S. external balance toward a more sustainable level. The deficit then resumed an upward march, reaching 4.3% by November. A closer look at America’s bilateral trading relationships since the deficit high-point in 2006 reveals a significant improvement with many countries, and only a small deterioration with a few others. China – with which the U.S. has its largest deficit – is the conspicuous exception, as the figure shows. 2011 looks set to be a year of yet further-rising trade tensions between the two countries.

Dunaway: U.S.-China Exchange Rate Thicket
CFR Conference Call: Chinese President Hu Jintao’s Meeting with Obama
Cooper, Landler: U.S. Shifts Focus to Press China for Market Access
Reuters: U.S. Lawmakers Urge Obama To Press Hu on Trade Rules
Beattie: Renminbi Issue Is Put on the Back Burner

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  • Posted by Todd Tucker

    Keep in mind that trade (both imports and exports) has collapsed. A trade surplus (with some countries) is nothing to brag about if your overall exports have declined by 30 percent. The idea is to have trade balance at the pre-crisis high levels of exports.

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