There is a new record in America since the month of September, and it is not one to celebrate. The United States’ trade deficit increased in September to 80.9 million according to Commerce Department data. This new record was set as American exports declined and supply chain problems continued within U.S. ports.
Imports in America rose almost half a percentage in September at the same time that exports fell by 3 percentage points to $207.6 billion worth of goods. And it was just in June that the previous record for the trade deficit had been $73.2 billion. So according to the Bureau of Economic Analysis (BEA), the deficit increased by $8.1 billion just since August.
The Commerce Department said that the gap between what the U.S. buys from other countries and what it sells to foreign nations surged by 11.2%, topping the previous record of $73.2 billion in June.
According to the data, trade deficits with major countries like China and Mexico increased. In September, we saw a $3.4 billion increase in the deficit with China. This brought America’s total trade deficit with China up to $31.5 billion. And during the same time period, the trade deficit with Mexico also increased by $2.3 billion.
This rise in the trade deficit included exports of crude oil, semiconductors, civilian aircraft engines, and computer accessories all decreased. This is while imports of computers and other electronics increased.
The Associated Press reported, “Part of the weakness reflected a 15.5% drop in petroleum exports related to the drilling rig and refinery shutdowns during Hurricane Ida in the Gulf of Mexico. Economists expect that decline to reverse in coming months with petroleum production coming back on line.”
The problem is that not only have imports increased, but the prices of those imported goods have risen as well. There are some reports that show imported consumer goods are about 1.4% more expensive now than they were a year ago. Even worse, industrial goods are 35% higher in the same time period.
It is easy for some to blame the increasing U.S. trade deficits on issues related to the pandemic.
Kathy Bostjancic, an economist at Oxford Economics, wrote, “We look for the trade balance to remain historically elevated through year-end, but moderation in domestic demand will cool import volumes while steady vaccine diffusion and slower virus spread should underpin stronger export growth.”
Along these lines, U.S. Senator Josh Hawley (R-MO) developed last month the “Make in American to Sell in America Act.”
It is a proposal he says will address supply chain and inflation issues. The senator’s plan stipulated that products identified as key to the defense and industrial base of the U.S. would need 50% or more of the value of the goods produced in America in order to be sold commercially.
Hawley believes that for decades the Washington elites shipped American jobs overseas while our factories were shuttered. The Republican told Fox Business that this left us “perilously reliant” on foreign manufacturing. He declared that it was time for a “bold, new economic agenda” that would restore the American heartland and keep the American worker above corporate profits.
Hawley noted, “We cannot let this moment pass and return to Washington’s failed economic consensus.”
In an essay Hawley wrote for the New York Times, he argued that America was dangerously dependent on the capacity of China to produce goods. He believes we should assert “economic independence” over our chief economic adversary. And he challenged us to start acting like a strong nation again.
We will see if Hawley can get his comrades on Capitol Hill to follow his lead.