Mixed Signals on U.S. Trade - Modern Distribution Management

Mixed Signals on U.S. Trade

Two deals on hold as trade deficit hits lowest level in year and a half.
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The latest report on the U.S. trade deficit sent another conflicting message on the economy – growing strength in American-made goods being sold overseas countered by slowing domestic demand.

The goods and services deficit declined 9.9 percent to $36.4 billion in September, the lowest deficit in a year and a half. September exports were up $1 billion from August, and September imports were down $3 billion.

The increase in exports helped the U.S. economy grow 2.9 percent over the summer, but some economists don’t expect the trend to continue, according to a recent article in the Wall Street Journal. It said "exports were helped in part by a boost in soybean sales that has faded, and economic growth around the globe remains choppy."

“The one-off surge in soybean exports will not be repeated in coming quarters, and growth in many of America’s major trading partners remains lackluster,” according to Wells Fargo economist Jay Bryson in a note to clients, cited in the WSJ article. He expects the trade gap to restrain the economy’s growth rate in coming months.

That lackluster trade growth has some groups concerned, including the Manufacturers Alliance for Productivity and Innovation, which published a report last week, Little Progress on U.S. Trade Agreements. The organization lamented that the "U.S. has not concluded a trade deal since 2012, despite having two in the works for years (the Trans-Pacific Partnership and the Transatlantic Trade and Investment Partnership)."

Meanwhile, MAPI said, a new trade agreement between the EU and Canada, the Comprehensive and Economic Trade Agreement, signed on Oct. 30 is estimated to "advance trade between Canada and the EU by 20 percent, add an annual C$12 billion (US$9 billion) and €12 billion (US$13.2 billion) to their respective economies, and eliminate almost all tariffs."

Little or no movement on the TPP and TTIP, coupled with opposition from both presidential candidates, means the U.S. streak of not passing trade deals is likely to continue.

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