Exports dropped 2 percent and imports rose 1.2 percent.
The monthly U.S. goods deficit with China rose in August to an enormous, humongous $32.9 billion from an enormous, humongous $30.6 billion.
The U.S. goods deficit with Japan was down a bit to $5.2 billion in August.
The U.S. goods deficit with South Korea was $2.7 billion in August.
U.S. exports of goods and services fell to $185.1 billion. This is the lowest level since October 2012.
“Horrible” For Economy
The Business Insider report, “Trade deficit balloons to $48.3 billion,” explains what this means for the U.S. economy,
“In one line: Horrible; trade is set to be a significant drag on Q3 GDP growth,” wrote Pantheon Macroeconomics’ Ian Shepherdson in a client note.
The reasons for this terrible trade report are clear: our trade policies. We have a strong and rising dollar, which means things made here cost more so they are less competitive in international markets. This is partly a result of China’s big devaluation (see “What Is Currency Manipulation?“) We don’t do anything about currency manipulation, which hurts U.S. manufacturers. A “strong” currency is great if you hold dollars, terrible if you want to sell stuff made here. But our trade deficit is not just caused by currency rates, it is also the result of other US policies that favor Wall Street and outsourcers over domestic manufacturers.
So a deal between the signatory nations has finally been reached for the Trans-Pacific Partnership.
This is firmly on Obama’s plate. Given his status as a liberal president, the public’s ever-growing disapproval of free-trade agreements, and the fact that he criticized such agreements when George W. Bush made them, he really should have known better. This is not what people voted for him to get.
As noted four years ago, when this thing was just beginning, the omens were not good. After the failed promises of NAFTA, a job-destroying trade deficit that has grown despite a long series of free-trade agreements, and ever-more-aggressive foreign mercantilism, it was obvious that America needed a new trade strategy.
This agreement includes Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, and Vietnam to start. Eventually, its advocates hope, it will include every nation on the Pacific rim, including Indonesia, the Philippines, Japan, Mexico, Russia, and China.
Yes, you read that right. China. America is on track for a free-trade agreement with its most voracious mercantilist trade rival.
As explained before, international trade isn’t just harmony, it’s largely rivalry, and mercantilism is how the winners play to win. But we naively refuse to play that game. Instead, we have faith in “free” trade, we think free-trade agreements will save us, and we lose.
Negotiators announced a deal to complete the TPP on Monday. TPP is still secret but leaks inform us that it does not include enforceable measures against currency manipulation. It also apparently incentivizes companies to outsource to low-wage countries like Vietnam.
Then next we receive a terrible trade deficit report – the result of our trade policies to date. These trade policies are designed to deindustrialize the U.S., moving factories and jobs to low-wage countries, so America’s “investor” class can pocket the wage differential for themselves. Inequality is soaring as a result, as the lost jobs are replaced by low-wage jobs for those lucky enough to find work.
And if the purely trade aspects weren’t bad enough, the TPP is also a profoundly anti-democratic agreement which signs away our right to govern our own economy. Despite being nominally a “trade” agreement, it contains provisions which interfere with areas well beyond the bounds of trade. To wit, it would:
- Limit how U.S. federal and state officials could regulate foreign firms operatingwithin U.S. boundaries, with requirements to provide them greater rights than domestic firms.
- Extend the incentives for U.S. firms to offshore investment and jobs to lower-wage countries.
- Establish a two-track legal system that gives foreign firms new rights to skirt U.S. courts and laws, directly sue the U.S. government before foreign tribunals and
- Demand compensation for financial, health, environmental, land use and other laws they claim undermine their TPP privileges.
- Allow foreign firms to demand compensation for the costs of complying with U.S. financial or environmental regulations that apply equally to domestic and foreign firms.
While there is no justification for going to the opposite extreme and allowing governments to ride roughshod over legitimate property rights, these agreements thus rigidly mandate market-based, property-first solutions to questions where societies must strike a reasonable balance between public and private interests.
The Centers for Disease Control and Prevention estimates that 48 million people suffer from food-borne illnesses each year in the United States. The scary thing about that number is that it is expected to increase if the Trans-Pacific Partnership and the Transatlantic Trade and Investment Partnership (TTIP) are signed.
Some might not know that many cases of food-borne illness here in the United States are due to imported food not being inspected carefully enough. With such a large chunk of the U.S. public falling ill from consuming food sold in supermarkets, it is outrageous that more effective measures have not been taken to halt the rate of food imports from foreign countries.
Under the TPP and TTIP, two harmful “free trade” agreements currently being negotiated, the U.S. Food and Drug administration (FDA) would essentially be stripped of the power to stop imports of unsafe food and to conduct extensive food safety inspections.
If the FDA even tries to skirt around the impending rules binding them to inaction, greedy multinationals – who only care about money and power – will be able to sue our government for impeding future profits.
The TPP and TTIP would completely re-write the current food safety standardsof the U.S. and other countries who participate in the agreements. Essentially, a level playing field would be created, where every participating country would have to abide by the “lowest common denominator standards of all participating countries.”
This means that even though the United States is capable of carrying out extensive food inspections on our imports to keep our people safe, the TPP and TTIP would make it so that we’d have to lower our standards to accommodate less developed countries who want to trade with us. Basically, both of these agreements will force the United States to accept toxic imports in the name of “free trade.”
All of this seems odd, considering President Obama signed the Food Safety Modernization Act 2 years ago. The Food Safety Modernization Act is a vast piece of legislation intended to grant the FDA more power to hold food suppliers responsible for food-borne illness outbreaks.
While some parts of the law have been enacted, the vast majority of the law’s regulatory framework remains in limbo. In fact, much of the legislation sits in the White House Office of Management and Budget collecting dust. It may never be implemented because our administration has changed its mind on protecting the health of U.S. citizens in favor of pleasing greedy multinational corporations in the food industry who will benefit from the TPP and TTIP.
Because the TPP and TTIP would effectively allow unsafe, toxic food to enter U.S. markets unchecked, more and more people will be exposed to health risks, such as food-borne illnesses. In 2012, 48 million people suffered from food-borne illnesses; that number is much too high. How many more people are going to suffer because our government continues to sign on and support these disastrous “free trade” agreements that only benefit the 1% crowd?
Contact your Congressional representative right now and ask what they’re doing to look out for the health of you and your family.