The U. S. Department of Commerce reported that the U. S. trade deficit widened more than expected in February as exports rose to the highest level in 16 months, but this gain was offset by a bigger jump in imports, reflecting increased demand for consumer goods from clothing to televisions.\u00a0 While exports of manufactured goods increased 1.6 percent, imports increased 3.9 percent.\u00a0 Manufactured goods comprised 80 percent of U. S. merchandise exports in February; however, manufactured goods also accounted for 75 percent of merchandise imports.\u00a0\u00a0 This shows that an increase in consumer spending doesn\u2019t create jobs for Americans because the vast majority of consumer goods are now manufactured in China.<\/p>\n
To meet the President\u2019s goal of doubling exports in five years, exports must grow at an annual rate of 15 percent.\u00a0 How can this be achieved if imports continue to exceed exports?<\/p>\n
One way would be to put pressure on China to allow its currency to rise in value against the dollar.\u00a0 China sets the value of its currency, the yuan, to always equal a set amount of other currencies that includes the dollar.\u00a0 When the dollar loses value, China buys dollars through U S. Treasury securities so that the yuan\u2019s value is always within a targeted range lower than the dollar to keep Chinese goods cheaper than U. S. goods.<\/p>\n
C. Fred Bergsten, head of the Peterson Institute for International Economics recently told the House Ways and Means Committee that the Chinese yuan is undervalued by about 40 percent against the dollar, and Hong Kong, Malaysia, Singapore, and Taiwan are undervaluing their currencies as well to avoid losing sales in markets where they compete against China.\u00a0 If these currencies were allowed to rise against the dollar to the proper levels, he believes it would trim America\u2019s trade deficit by $100 billion to $150 billion annually and could result in an additional 600,000 to 1.2 million jobs.<\/p>\n
When Secretary Geithner was interviewed recently on CNN, he said, \u201c I think they\u2019ll come to decide it is in their interest . . . I think it is quite likely that they move over time.\u201d\u00a0\u00a0 Is he really that na\u00efve?\u00a0 China allowed the yuan to appreciate by about 20 percent from mid-2005 to mid 2008 but halted the rise after the global economic crisis began to cut deeply into its exports.\u00a0 If that is the case, why did the U. S. trade deficit continue to grow between 2005 and 2008?\u00a0 It actually reached a high of $268 billion before it dropped to $226.8 billion in 2009.<\/p>\n
Under a 1988 trade law, the Treasury Department must report to Congress every six months on whether any country has been found manipulating its currency to gain trade advantages.\u00a0 The report was due by April 15th<\/sup>, but Secretary Geithner requested a three-month extension in early April.<\/p>\n A group of 14 U. S. senators recently unveiled legislation that would provide for penalty tariffs to be imposed on Chinese imports if China does not allow its currency to rise in value.\u00a0 Democrat Senators Sherrod Brown and Debbie Stabenow and Republican Senators Sam Brownback and Lindsey Graham co-sponsored the bill. In the House, 130 members sent a letter to the President urging a tougher approach on China\u2019s currency manipulation.<\/p>\n A good reason why Obama was elected is that Americans were tired of losing jobs.\u00a0 It\u2019s high time that actions by the Obama administration match his campaign rhetoric.<\/p>\n","protected":false},"excerpt":{"rendered":" The U. S. Department of Commerce reported that the U. S. trade deficit widened more than expected in February as exports rose to the highest level in 16 months, but this gain was offset by a bigger jump in imports, reflecting increased demand for consumer goods from clothing to televisions.\u00a0 While exports of manufactured goods […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-23","post","type-post","status-publish","format-standard","hentry","category-general"],"_links":{"self":[{"href":"https:\/\/savingusmanufacturing.com\/blog\/wp-json\/wp\/v2\/posts\/23","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/savingusmanufacturing.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/savingusmanufacturing.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/savingusmanufacturing.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/savingusmanufacturing.com\/blog\/wp-json\/wp\/v2\/comments?post=23"}],"version-history":[{"count":1,"href":"https:\/\/savingusmanufacturing.com\/blog\/wp-json\/wp\/v2\/posts\/23\/revisions"}],"predecessor-version":[{"id":24,"href":"https:\/\/savingusmanufacturing.com\/blog\/wp-json\/wp\/v2\/posts\/23\/revisions\/24"}],"wp:attachment":[{"href":"https:\/\/savingusmanufacturing.com\/blog\/wp-json\/wp\/v2\/media?parent=23"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/savingusmanufacturing.com\/blog\/wp-json\/wp\/v2\/categories?post=23"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/savingusmanufacturing.com\/blog\/wp-json\/wp\/v2\/tags?post=23"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}