NAM Report Says Growth Rate Of Manufactured Goods Deficit Down Sharply In First Four Months Of 2006

Deficit with free-trade partners lower by one-third from four years ago.

A report from the National Association of Manufacturers says the growth rate of the U.S. manufactured goods trade deficit slowed sharply in the first four months of the year.

The U.S. trade deficit in manufactured goods came in at $160.5 billion through April, up $7.2 billion versus the same period a year ago. While that represents an increase of 5 percent, NAM noted it’s well below the average 13% increase for the past four years, the result of a pickup in export growth and a slowdown in import growth.

“The U.S. deficit with NAFTA and other free-trade partners has shrunk by one-third from four years go,” said Frank Vargo, NAM’s vice president of international economic affairs. “Over the same period, the deficit with countries without free trade agreements (FTAs) grew by two-thirds. If the deficit with those countries had behaved like the deficit with our free-trade partners, our overall manufactures deficit today would be less than half of what it actually is.”

Manufactured goods exports for the four months of 2006 were up 12 percent over the same period last year, above the import growth rate of 9%. The fastest growth in manufactured goods exports, NAM said, was to the Middle East, up 34%, followed by China, up 29%. Based on dollar amounts, the largest jump in manufactured goods exports so far this year has been to NAFTA, which has seen a $10 billion increase, compared with the $5 billion increase to the European Union and the $2.5 billion increase to China.

Meanwhile, imports from China rose $12 billion through April.

Among FTA countries, NAM said the improvement was just $100 million, from a deficit of $9.49 billion in the first four months of 2005 to a deficit of $9.38 billion this year. The group pointed out, however, that the improvement extended a trend seen since 2002, and noted the
$9.38 billion deficit in 2006 was one-third lower than the $13.7 billion in the first four months of 2002.

“The facts contrast the widely heard view that FTAs are the principal cause of our trade deficit,” Vargo said. “An astonishing 82 percent of our manufactures deficit is with Asia, with China accounting for over half of that number. Clearly, there are factors, including China’s currency, at work here.”

The full report is available at

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