American manufacturers are suffering, according to recent statistics by the MAPI Foundation, a research affiliate of the Manufacturers Alliance for Productivity and Innovation.
According to a report by MAPI’s Ernest Preeg, senior advisor for trade and finance, U.S. manufactured exports decreased by two percent, to $298 billion in the second quarter as compared with 2014.
It was also reported that the U.S. deficit in manufacturing rose by $21 billion, or 15 percent, compared with the second quarter of 2014. This follows a 30 percent increase in the manufacturing trade deficit in the first quarter, inflated by weather issues and a West Coast dock strike.
Chinese exports were also down two percent, to $533 billion in the second quarter on a year-over-year basis. China's trade surplus increased by $14 billion, equal to six percent in the second quarter over 2014, following a 24 percent rise in the first quarter of 2015.
It’s scary to see United States manufacturers losing ground even in a declining Chinese export environment.
According to Preeg, “The U.S. $48 billion deficit increase in the first half of the year equates to a loss of 300,000 trade-related American manufacturing jobs and the deficit is on track for a loss of 500,000 or more jobs for the calendar year.”
Preeg adds that the new data, combined with China devaluing its currency relative to the dollar in order to stimulate exports, continues an unfair and unbalanced trade relationship for U.S. manufacturing.
So what do we do? In the short term, we need the Fed to put any interest rate increases on hold. We’d also better pray that the equities and real estate bubble, inflated by quantitative easing, doesn’t burst just when American manufacturers are getting a handle on cost and quality issues.
If that‘s not uncertain enough, consider this: Donald Trump is a leading contender as the Republican presidential candidate. With a ridiculously long election cycle, crashing commodity pricing worldwide and a faltering jobs and income outlook, the conditions are ripe for some old style protectionist trade policy.