U.S. trade deficit in manufactures surged 9% , with exports growing by only 2% for the year, to $1.1 trillion.
After a relatively flat first three quarters in 2013, the U.S. trade deficit in manufactures surged 9% in the fourth quarter, according to an analysis from the Manufacturers Alliance for Productivity and Innovation (MAPI).
In the report, Ernest Preeg, Ph.D., MAPI senior advisor for international trade and finance, notes that U.S. exports grew by only 2% for the year, to $1.1 trillion, including 3% in the fourth quarter.
Conversely, Chinese exports grew significantly faster, by 8%, to $2.1 trillion, including by 10% in the fourth quarter. In dollar terms, the U.S. deficit was $501 billion in calendar year 2013 while the Chinese surplus was $913 billion. China’s exports are on track to double U.S. exports in three years.
“The $11 billion (fourth quarter) increase in the deficit amounts to a three-month net loss of 40,000 to 100,000 American manufacturing jobs,” Preeg warned. “These striking contrasts in the dominant sector of trade that accounts for more than 70% of U.S. merchandise exports and more than 90% of Chinese exports raise important questions as to what will happen in 2014, and the outlook is uncertain.”
The 5% increase in imports in the fourth quarter is primarily responsible for the larger deficit, reflecting higher U.S. growth and enhanced export-led growth strategies by some trading partners, particularly in Asia.
The report notes that within information technology sectors, Chinese exports of $769 billion in 2013 were significantly larger than the $210 billion of U.S. exports, and Chinese export growth of $72 billion far surpassed U.S. export growth of $3 billion.
The five largest exporters of manufactures—China, the EU (in trade with non-members), the United States, Japan, and South Korea—account for approximately two-thirds of global exports.
The other four recorded large increases in their surpluses from 2009 to 2012, with increases of $416 billion for China, $251 billion for the EU, $70 billion for Japan, and $69 billion for South Korea. Meanwhile, the United States suffered an offsetting $192 billion increase in its deficit during that period.
“This is the global challenge in starkest terms for U.S. export competitiveness in the strategic, technology-intensive manufacturing sector,” Preeg concluded.