U.S. Trade Gap Widening in Advanced Technology

Jan. 20, 2010
While overall trade deficit rose marginally in November, numbers suggest U.S. is importing advanced technologies at alarming rates.

The ongoing -- and apparently deepening -- trade deficit has begun to undercut what has long been the U.S.'s primary strength: producing advanced technology.

Even though the nation's trade deficit widened to $36.4 billion in November from $33.2 billion the month before, according to statistics from the U.S. Census Bureau, what is alarming is the chasm in importing advanced technology, which grew to a new monthly record of $8.30 billion. The new mark eclipses the previous high of $7.73 billion, back in October of 2007, by 7.3%.

"It warns that a long-time strength of the U.S. economy is fast becoming a major weakness," said Alan Tonelson, a research fellow for the U.S. Business & Industrial Council Educational Foundation, a Washington research organization studying U.S. economic, technology, and national security policy.

U.S. exports of high tech goods dropped by 11.31% in November, from $23.70 billion to $21.01 billion, while imports of those products stood at $29.3 billion.

Another point of concern is that the increase in overall trade deficit came despite a 10.75% drop in the imbalance against China. According to Tonelson, the manufacturing troubles in the U.S. aren't just limited to trade with the Chinese.

"When I look at those numbers, I see the inevitable result of trade policies that focused on outsourcing," says Tonelson, referring to trade agreements, such as NAFTA. "We're seeing the fruits of Washington's decision to encourage companies to increasingly supply the high-priced U.S. market from very low-cost countries. That's not the only reason why U.S. manufacturing's performance has been so relatively poor in recent decades, but it's a major contributor."

America's trade deficits with other countries soared in November, with importation of Korean goods jumping 30.7%, Japan by 22.8% and Germany by 15.4%.

Overall, U.S. exports increased only marginally -- by only .90% -- while imports rose nearly three times faster, by 2.6%. At that rate, warned Tonelson, America's edge will evaporate faster than previously thought.

"If America keeps buying so much more of the world's most advanced goods than it sells, the President and all Americans can kiss real recovery and high-wage job creation goodbye," he said.

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