|More US-bound goods than US-originated ones: at the Port of Rotterdam.|
The United States in June posted a record trade deficit in goods with the European Union, a sign of the sharp divergence in fortunes between the two regions.The upturn in the US trade deficit has been attributed to the aforementioned sliding euro which makes American exports dearer and European imports cheaper:
The overall U.S. trade deficit, which includes services, climbed 7.1% to a seasonally adjusted $43.8 billion in June, the government said Wednesday. The upturn largely reflected an all-time high in imports such as autos, drugs and commercial aircraft from Europe, whose goods are cheaper to buy because of a weakened currency [my emphasis].
The goods deficit with the EU jumped nearly 16% in June to an unadjusted $14.5 billion. Earlier in the summer the continent was wracked by another crisis involving heavily indebted Greece that was only resolved, at least for now, by a controversial “rescue” plan after the EU came to the very brink of losing its first member. The latest flareup in Greece cast another cloud of uncertainty over Europe.
The flip side of a stronger U.S. economy compared to the rest of the world is a sharp increase in the value of the dollar that’s made American goods and services more expensive in Europe and elsewhere, cutting into exports. Sales of U.S.-made goods and service abroad fell 0.1% in June to a seasonally adjusted $188.6 billion.From a sociological standpoint, I've always been fascinated with Americans' willingness to bash non-white people, especially Asians, for trade transgressions and so on. What if the main offenders though are Westerners like themselves, i.e., Western Europeans? It's certainly harder to demagogue against them than "foreign" Japanese, Chinese, etc. So, even if the former are largely to "blame" for the rising US trade deficit, it doesn't really get that much press.
With the Federal Reserve on the cusp of the first interest-rate increase since 2006, the dollar could remain strong for months to come.
If I were an opportunistic American politicians, though, I'd be blasting Europeans right about now to score easy points with the anti-trade crowd in the run-up to the 2016 elections.