US Exports and Imports

We have new data today on the US's exports and imports from the BEA. CNN/Money reports:

NEW YORK (CNNMoney.com) -- The nation's trade deficit tumbled in October on lower prices for oil imports, but the gap with China kept growing ahead of a key trip to that country by Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke and other top officials.

Overall, imports topped exports by $58.9 billion in October, down from $64.3 billion in September, the Commerce Department reported. Economists surveyed by Briefing.com had forecast a much smaller decline, to $63 billion.

But the deficit widened with China, which runs by far the biggest trade surplus with the United States of any other country.

The report comes as Paulson, U.S. Trade Representative Susan Schwab and other officials left for China for meetings that are sure to bring up some contentious trade issues. Bernanke is due to join them after Tuesday's meeting of the Fed policymakers.

China is on everyone's mind these days, and as a result, almost all international economic news is now viewed through the China lens. As this news excerpt mentions, the trade deficit with China does indeed continue to widen even as the overall US trade deficit seems to have peaked (at least temporarily).

But it's worth noting that simply looking at the US trade deficit with China is a bit misleading. In fact, US exports to China have been growing much faster than US imports from China. The problem is, of course, that the levels of exports and imports are very different, so US exports would have to grow much much faster than imports in order for the US trade imbalance with China to stop rising.

The following tables show how US exports and imports have changed in 2006 compared to 2005. First, let's take a look at changes by trading partner:



US exports to nearly all of the US's trading partners have grown solidly over the past year, but exports to most of the developing world - including China - have done particularly well. Interestingly, the parts of the world that seem to be lagging in terms of US export growth are the rest of east Asia, such as Japan, Taiwan, and Korea.

The next table shows changes in US imports and exports by type of product:



Obviously, a huge chunk of the increase in US imports is oil. The interesting thing to notice in this table is that US imports of consumer goods have actually grown relatively slowly over the past year. Meanwhile, exports have grown soidly in the US's traditional strengths: capital goods (things like machinery, telecommunications equipment, and aircraft) and industrial supplies (things like chemicals, wood and paper products, metals, etc.).

Meanwhile, Treasury Secretary Paulson heads to China to try to work some magic on the US trade deficit. The pressure on him to do so is substantial. But short of somehow managing to get Chinese consumers to do more spending and US consumers to do less of it, I think he has little chance of actually accomplishing that goal.