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- Feb. 14, 2013 -


Supply Chain Graphic of the Week: US Trade Deficit with China Continues to Soar


Another Record Set for 2012,  at $315 Billion; Cumulative Annual Growth of 11.7% Since 2000; If it Can't Continue, Will It Stop?


By SCDigest Editorial Staff



There are now three certainties in life: death, taxes, and a large US trade deficit with China.


Times change, presidents come and go, US manufacturing seems to be reviving, but regardless of any of that, the trajectory of the US trade gap continues apace, as shown in the graphic below.


We've used this graphic for the last two or three years, and have now updated it as the December numbers were released last week, giving us the full 2012 data. The trade deficit with China in goods for the full year rose to another record, reaching $315 billion, up from $295 billion in 2011.


The rise from $83.3 billion in 2000 to $315 billion last year represents a cumulative average annual growth rate of an astounding 11.7%. That is a big number, and that includes a fairly sharp drop in 2009 as a result of the global recession.


Perhaps even more eye-opening is a similar chart showing the cumulative trade decifit with China over that same period. As can be seen below, that total has now reached $2.69 trillion. What's more, that total comes directly out of US GDP, as trade deficits are deducted from total output in the way GDP caculated (it's a little more complicated than that actually, as what US business and consumers saved from cheaper China prices and spent elsewhere probably should be added back in for the total impact. But you get the idea).




The late, well-known economist Herbert Stein (father of comedian/writer Ben Stein, by the way), famously said "If something cannot go on forever, it will stop."


Many have said the US trade deficit with China is unsustainable, but it doesn't seem we are anywhere near yet the point where it is going to stop.

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