The figures are in and it’s another record, this one of dubious distinction, set by the United States of America.
According to data released Friday by the U.S. Census Bureau and the Bureau of Economic Analysis, the United States logged a record $365,694,500,000 merchandise trade deficit with the country that provides the manufacturing floor to the world: China.
The BEA described the evolution of the deficit in a press release: “The deficit with China increased $22.6 billion to $365.7 billion in 2015. Exports decreased $7.5 billion to $116.2 billion and imports increased $15.1 billion to $481.9 billion.”
The $22,615,700,000 increase in the merchandise trade deficit with China represents a 6.6 percent increase over the 2014 deficit of $343,078,800,000. The trend of the past 30 years:
The merchandise trade balance involves the total goods traded between the two countries and does not include the import and export of services.
The U.S. has run a surplus in its exchange of services with China, according to the BEA, while it runs a much, much larger deficit in the exchange of merchandise.
For example, according to the BEA, the U.S. ran a $28.077 billion surplus in services traded with China in 2014. (2015 figures for balance of trade in services will be released March 4th.)
Subtract the $28 billion surplus in services from the $343 billion deficit in goods and the U.S. tallied an overall goods-and-services trade deficit of $315.116 billion in 2014.
The value of trade with China has increased dramatically since 1985. The gap in goods traded has increased as well, heavily in China’s favor. According to Census Bureau figures:
- In 1985, the U.S. exported $3.8557 billion in goods to China while it imported $3.8617 back from China for a deficit of $6 million.
- In 1995, the U.S. exported $11.7537 billion to China and imported $45.543 billion from China for a deficit of $33.7895 billion.
- By 2005, the merchandise trade deficit with China increased to $202,2781 billion.
- The 2014 deficit was $315.116 billion.
- In 2015, the merchandise trade deficit with China was $365.6945 billion.
In 2015, the U.S. ran a merchandise trade deficit with the entire world of $736.1719 billion. The largest deficit was with China, followed by Germany, Japan, Mexico and Vietnam.
Presidential candidate Donald Trump rails against these countries as ripping off the United States. He says he will rectify the imbalance of trade with these countries by negotiating better deals, but also by instituting a business friendly tax policy that will motivate companies to bring manufacturing back to the United States.
When you survey the goods and equipment used in American homes and businesses, a mind boggling majority of merchandise was manufactured in China.
How might Trump’s strategy impact an average family?
Child labor in manufacturing facilities in China produce everything from tennis shoes to mobile phones to computers for barely dollars a day. For example, it was reported that Apple sub-contractor Foxconn, which produces Apple’s iPads and iPhones, paid its workers sweatshop wages of about $0.80 per hour or about $130 per month, working in excess of a 40 hour week.
By contrast, in the United States, the push is on to increase minimum wages to $15 per hour from current national minimum of approximately $7.25 per hour.
Meanwhile, Donald Trump has said American wages are too high and that he could not endorse the $15 per hour minimum wage.
Trump has said on radio, at rallies, and in print, “Our taxes are too high. Our wages are too high. We have to compete with other countries.”
Allow this to come into focus by considering this question: If Donald Trump convinced Apple to bring iPhone manufacturing and jobs back to the U.S., how much would an iPhone cost when it is put together by people making $7.25 per hour – let along $15 per hour – when it is now put together by people making $0.80 per hour and it currently costs $400 – $700 per phone?
Or, from another angle, if that iPhone manufacturing job were to come back to America and the iPhone maintained a retail cost of $400 to $700, how much would the American worker earn and what quality of life would s/he enjoy under Donald Trump’s scenario?
When Trump says ‘Our wages are too high,’ just what would be an acceptable wage and what quality of life might that wage support?