Coming up again on the short end of the trade stick

Coming up again on the short end of the trade stick

Trade deficits are strange things to behold. Sometimes, even when they contain bad news, there’s a kernel of good news hidden within.

The Commerce Department announced that the U.S. trade deficit shot up in July to the highest level in six months, driven by a surge in the oil and automobile segments.

The deficit rose 16.3 percent to $32 billion in July — just a little over $1 billion a day. Some years ago, the Commerce Department estimated that for every billion dollars in trade, 13,000 jobs were lost or gained. Even factoring for inflation, if that number is only half as true today, that’s a loss of 6,500 jobs every day; more than 200,000 for the month.

July’s numbers were the largest imbalance since January, and the percentage increase was the biggest in more than a decade.

But, as we said, trade numbers are funny things, and so within those disheartening numbers, there was this: a 21.5 percent spike in imports of autos and auto parts reflected in part a rebound in production at U.S. auto plants owned by General Motors and Chrysler.

Domestic auto production was down in May and June as GM and Chrysler were working their way out of bankruptcy. Since the Detroit Three and foreign automakers with plants in the United States use foreign-made parts in the U.S. plants, an increase in auto part imports means U.S. factories are making more cars.

Fair, free or unfair?

That remains about as happy a face as one can put on these monthly figures. While there is no question that the United States must be a trading partner in the global economy, years of trade deficits raise questions about what constitutes fair trade and how long the United States can continue to absorb the deficits that result from free — and often, unfair — trade.

And the $22.4 billion deficit attributable to foreign oil imports — the highest total since December — raises questions about how long we can continue operating under the current energy policy and current energy consumption patterns. That’s especially true given that many of those oil dollars are going to nations that are less than supportive of U.S. policy.

The one number in which little good can be seen is the 10.8 percent increase in July in our trade deficit with China. So far this year, the trade deficit with China has totaled $20.4 billion, which — wait, here’s some good news — is running 14 percent below last year’s all-time high.

As we continue to spend billions of dollars more on the products of other countries than they spend on ours, those countries continue to amass U.S. dollars, which they use to buy up private U.S. assets and public U.S. debt.

Protesters at political rallies who rail against government policies and predict the collapse of the dollar and intolerable burdens on their children and grandchildren, might want to look at the “made in ...” labels on the clothes they’re wearing, the cars they arrived in, the markers they used to make their signs, even the food they eat and the aspirin they took for the headaches they say Congress is giving them. And then they might want to consider an all-American observation from Pogo, a cartoon character of another age: We have met the enemy and he is us.