Alan Tonelson is a Research Fellow at the U.S. Business & Industry Educational Foundation and the author of The Race to the Bottom: Why a Worldwide Worker Surplus and Uncontrolled Free Trade are Sinking American Living Standards (Westview Press).

The January 2006 trade deficit in goods and services shot past December 2005’s level, reaching a new record of $68.51 billion.  The January deficit was 5.29% greater than the December total of $65.07 billion, and 1% higher than the previous monthly record of $67.84 billion set in October 2005.  

Reversing a recent trend, the rise in the trade deficit was led by a big jump in the non-oil deficit.  This figure rose from $46.84 billion in December 2005 to $49.59 billion in January 2006, a jump of 5.86%.  The increase in the oil deficit was much slower—3.34%-- and reached $22.56 billion in January.  This non-oil deficit set a new monthly record, eclipsing September 2005’s mark by 4.65%.

“These worrisome January trade figures remind us more that America’s global trade problems entail much more than the addiction to oil cited recently by President Bush,” said Alan Tonelson, Research Fellow at the U.S. Business and Industry Council.  “The January trends spotlight the continued decline of national competitiveness in ‘industries of the future,’ such as high-tech hardware and services, and throughout our vital manufacturing sector.”

Indeed, the U.S. manufacturing sector took a big hit as well in January.  The January manufactures deficit of $51.71 billion was 5.15% higher than the December total of $49.17 billion.  From December to January, manufactures exports sank 4.8% from $59.98 billion to $57.11 billion.  Manufactures imports dropped only slightly from $109.16 billion to $108.81 billion or 0.3%.  

The trade picture was no better for advanced technology products, which traditionally have created high-wage, high-benefit jobs.  The nation’s trade deficit in advance technology products rose 4.4% in January from $3.23 billion to $3.38 billion.  This increase was spearheaded by a nosedive in advanced technology products exports, which fell 10.06% from $20.34 billion to $18.29 billion.  Advanced technology products imports decreased significantly as well, but only from $23.57 billion to $21.67 billion, an 8.07% decline.

The politically and economically significant goods trade deficit with China soared nearly 10%, from $16.3 billion in December to $17.91 billion in January.  Despite China’s continued rapid growth, U.S. goods exports to the People’s Republic cratered in January, from $4.22 billion to $3.49 billion, a drop of 17.1%.  Yet U.S. goods imports from China continued their relentless increase, rising from $20.51 billion to $21.41 billion, a 4.34% rise.  These China figures contrast sharply with U.S. goods trade statistics for the European Union and Japan, where the January deficits fell by 5.15% and 3.85% respectively.

Other countries with which the goods trade deficit rose sharply include Canada (a jump of 11.07%), Mexico (8.92%), and Taiwan (49.67%).

The U.S. trade performance with India, visited recently by President Bush, continued to disappoint greatly despite considerable hype about India’s rapidly growing economy and consumer market.  From December 2005 to January 2006, U.S. goods exports to India plummeted 22%, from $765 million to $596 million.  U.S. goods imports from India surged 19.94%, rising from $1.55 billion to $1.85 billion.  As a result, the January goods trade deficit with India ballooned by 61.36% to $1.26 billion.

Said USBIC’s Tonelson, “President Bush may or may not be giving away the nuclear technology store to India. But these trade figures show that the United States keep giving away the economic store.”

The overall U.S. trade deficit in goods increased significantly as well, from $70.14 billion to $73.39 billion, or 4.63%.  The longstanding surplus in services, however, shrank dramatically in January by 3.81%, from $5.067 billion to $4.874 billion.  U.S. services exports rose only 0.65% in January, while imports increased more than twice as fast by 1.42%.

In the critical other private services category, which generates many of the economy’s highest-paying jobs on average in information technology and professional services, the trade balance shrank by nearly 1% in January, from $4.45 billion to $4.41 billion.  U.S. other private services exports and imports both stagnated.  Yet the failure of the other private services surplus to begin increasing again means bad news for U.S. workers in these cutting-edge sectors.  

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