Posted on 05/13/2003 12:05:16 PM PDT by Willie Green
For education and discussion only. Not for commercial use.
WASHINGTON - The U.S. trade deficit widened in March to $43.5 billion, the second-highest on record, as imports of foreign-made industrial supplies, including crude oil, rose to an all-time monthly high.
The Commerce Department reported Tuesday that the trade gap grew by 7.6 percent in March from February's deficit of $40.4 billion.
Although exports went up for the third month in a row in March, imports rose nearly five times faster, leading to a bloated trade deficit that was second only to the record deficit of $44.9 billion produced in December.
Economists were expecting the deficit to get bigger in March but not as much as it did. Economists were forecasting the trade imbalance to reach $41 billion.
To combat the trade deficit, the Bush administration says the United States should seek to boost American exports by attacking foreign trade barriers, rather than raising barriers to imports coming into the country.
Trade critics, including labor unions, say the deficit is evidence that President Bush's free-trade policies are not working and are contributing to hefty job losses in manufacturing.
In March, imports of goods and services increased by 2.9 percent from the previous month, to $126.3 billion, the second-highest level of imports ever recorded for a month.
Imports of a wide variety of industrial supplies, including crude oil and plastics, rose to a record $28.3 billion in March.
America's bill for imported crude oil hit a record of $9.1 billion in March. That reflected an increase in the amount of imported crude oil. The price of crude oil dipped to $30.27 a barrel in March, from $30.46 in February, which marked a 20-year high.
Although the United States economy is struggling to get back to full speed, its economic health is still better than many other countries' that have been mired in a worldwide economic slump.
Exports of goods and services grew by 0.6 percent in March from the previous month — to $82.8 billion. Private economists say the weaker U.S. dollar, which has lost altitude over the past year, is helping out exports at a time of lackluster global demand. Weak growth abroad, however, will continue to be a challenge for U.S. exporters, economists say.
In March, exports of industrial supplies, including cotton and chemicals, rose to $14.3 billion, the highest level since February 2001.
A weaker dollar makes U.S.-made products more competitive on foreign markets and less expensive for overseas buyers.
The U.S. dollar fell to a new four-year low against the euro Monday. The decline came one day after Treasury Secretary John Snow said a weaker dollar would help U.S. exports — a view that private economists and U.S. manufacturers share.
However, traders viewed the remarks as signaling a retreat from the long-standing position of the Bush administration and the previous Clinton administration in support of a strong dollar.
Treasury Department spokesman Rob Nichols on Monday said Snow's remarks on Sunday were not meant to signal a shift away from a strong dollar policy.
Nichols pointed out that in another TV appearance, on "Fox News Sunday," Snow expressed his support for a strong dollar. "We have a well articulated and long-held view on the dollar that I've articulated a number of times," Snow said on Fox. "We believe in a strong dollar."
Tuesday's trade report also showed that the United States' deficit with Mexico reached a record of $3.9 billion in March. The U.S. trade shortfall with Canada widened to $5.2 billion in March, the highest level since January 2001.
The U.S. deficit with oil-producing nations, including Saudi Arabia and Venezuela, grew to an all-time monthly high of $5 billion in March.
The United States' politically sensitive trade deficit with China grew to $7.7 billion in March, from $7.6 billion in February. In a bright spot, though, exports to the country rose to a record $2.4 billion in March.
The United States' trade gap with Japan widened to $5.8 billion in March, from $5.3 billion in February.
In the new "global economy", economic stimulus via tax cuts is negated by trade policies and the growing trade deficit. The "trickle down" ripple effect is redirected offshore, and Amercian taxpayers are merely saddled with additional government debt.TRADE DEFICIT: Formally termed a balance of trade deficit, a condition in which a nation's imports are greater than exports. In other words, a country is buying more stuff for foreigners than foreigners are buying from domestic producers. A trade deficit is usually thought to be bad for a country. For this reason, some countries seek to reduce their trade deficit by--
- establishing trade barriers on imports,
- reducing the exchange rate (termed devaluation) such that exports are less expensive and imports more expensive, or
- invading foreign countries with sizable armies.
What does this have to do with trade deficits? These aren't government trade deficits, these are private consumer transactions for the most part. Government debt comes from spending as authorized by the Congress and executed by the President in excess of collections.
We have trade deficits because we all go to Wal-Mart every week.
Instead of trickling-down, rippling through the domestic economy and generating federal revenues through economic growth, Dubya's tax cuts flow overseas in the form of trade deficits and increased overseas investments. Since he doesn't propose federal budget reductions to accompany his tax cuts, the result will be continued deficit spending and increased National Debt.
It's glaringly evident that Dubya's "stimulus package" is severely flawed.
Adam Smith, Wealth of Nations, Book 4 Ch. 3
Of Restraints upon the Importation from Foreign Countries
of such Goods as can be produced at Home
"There seem, however, to be two cases in which it will generally be advantageous to lay some burden upon foreign for the encouragement of domestic industry...
As there are two cases in which it will generally be advantageous to lay some burden upon foreign for the encouragement of domestic industry, so there are two others in which it may sometimes be a matter of deliberation; in the one, how far it is proper to continue the free importation of certain foreign goods; and in the other, how far, or in what manner, it may be proper to restore that free importation after it has been for some time interrupted....
- The first is, when some particular sort of industry is necessary for the defence of the country....
- The second case, in which it will generally be advantageous to lay some burden upon foreign for the encouragement of domestic industry is, when some tax is imposed at home upon the produce of the latter. In this case, it seems reasonable that an equal tax should be imposed upon the like produce of the former....
- The case in which it may sometimes be a matter of deliberation how far it is proper to continue the free importation of certain foreign goods is, when some foreign nation restrains by high duties or prohibitions the importation of some of our manufactures into their country. Revenge in this case naturally dictates retaliation, and that we should impose the like duties and prohibitions upon the importation of some or all of their manufactures into ours....
- The case in which it may sometimes be a matter of deliberation, how far, or in what manner, it is proper to restore the free importation of foreign goods, after it has been for some time interrupted, is, when particular manufactures, by means of high duties or prohibitions upon all foreign goods which can come into competition with them, have been so far extended as to employ a great multitude of hands. Humanity may in this case require that the freedom of trade should be restored only by slow gradations, and with a good deal of reserve and circumspection. Were those high duties and prohibitions taken away all at once, cheaper foreign goods of the same kind might be poured so fast into the home market as to deprive all at once many thousands of our people of their ordinary employment and means of subsistence. The disorder which this would occasion might no doubt be very considerable....
Just some perspective
BINGO.
Bump
Our asinine Energy Policy is the by-product of a corrupt bipartisan effort.
Dubya himself advocates "funnyfuels" like the bogus "hydrogen economy",
and his own brother Jeb opposes Florida offshore drilling.
In conjunction with paltry GOP support for modern, fuel-efficient mass-transportation systems, our nation is in dire need of sensible leadership in development of a sound energy policy. Sadly, politicians on both sides of the aisle are technologically incompetent and fall prey to the worst forms of junk science. (Nah, that's being too kind. The truth is, the ba$tard$ are just plain corrupt and don't give a rat's patoot about the fate of the nation as a whole.)
A shift in tax and trade policy back towards that originally favored by our Founding Fathers.
As proposed in The First Federal Revenue Law, Congress should enact a relatively low flat-rate, across-the-board "revenue tariff" of 10~15% to be levied on ALL imported goods without exception. The ineffective and damaging influence of protectionist "targetted tariffs" advocated by special interests should be banned. In conjunction with the revenues raised by such a revenue tariff, an offsetting reduction in other forms of domestic taxation will result in the desired "trickle down" ripple effect stimulating our domestic economy. Any reduction of the bloated, burdensome federal regulatory bureaucracy would also be welcome.
Your example is incomplete.
It fails to consider domestic production.
As sovereign nations, they're free to implement whatever tax policies they deem appropriate for their own self-interests.
Then we tariff more..
Then they tariff more...
No. Those retaliatory actions are characteristic of protectionist targetted tariffs advocated by special interests.
Revenue tariffs do not function in that manner, their sole purpose is to raise revenue for the federal government and are totally independent of any policy or action directed toward specific foreign nations.
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