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News from EPI U.S. Lags Behind China, Japan, and Germany in Export Performance

The United States ran a significant trade deficit in its top 30 exporting industries in 2013, a stark contrast to the export performance of industries from China, Germany, and Japan, its top three international competitors, according to a new EPI report. In The Consequences of Neglecting Manufacturing: Compared With Other Nations, U.S. has More Import Competition in Leading Export Industries, EPI Director of Trade and Manufacturing Policy Research Robert E. Scott analyzes U.S. export competitiveness by comparing trade in goods exports, goods imports, and import competition rates for the United States, China, Germany, and Japan.

Overall, the United States had a trade deficit of $67.4 billion in its top 30 exporting industries, while the top 30 exporting industries of China, Germany, and Japan had sizeable trade surpluses, ranging from $223.2 billion in Japan to $285.3 billion in Germany to $647.7 billion in China. Overall the value of exports exceeded import values in the all of the top 30 export industries in China and in 29 of the top 30 industries in Japan and Germany. In China, exports exceeded imports by more than four-to-one, in Japan by nearly three-to-one, and in Germany by nearly two-to-one. In the United States, however, the value of exports averaged only 91.5 percent of imports in the top 30 exporting industries—in other words, imports exceeded exports by 9.5 percent.

“With growing U.S. exports near the top of the Obama administration’s list of priorities, it is important to know where the United States stands among its international competitors. The United States is the second largest exporter in the world, but it is also the only major exporter that has consistently run overall goods trades deficits for more than two decades,” said Scott. “This poor performance has a few key causes—namely, currency manipulation, tariff and nontariff barriers to U.S. exports, and the failure to develop an effective strategy for manufacturing development.”

In addition to being the most open market as measured by the ratio of imports to exports, the United States differed from the other three countries in another significant way: while the top 30 export industries in China, Japan, and Germany were all without exception manufacturing industries, six of the top 30 U.S. export industries were primary commodity exporters, including grains, seeds, nuts, and crude or refined energy products. These six sectors were responsible for a trade surplus of $69.7 billion. The United States also had a trade surplus in aircraft and parts of $76.2 billion. However, these surpluses were more than offset by trade deficits in motor vehicles and parts ($117.2 billion) and electronics ($110.2 billion), both important U.S. manufacturing industries.

“It is disturbing that policymakers stand idly aside and allow U.S. manufacturing to lose out to our international competitors,” continued Scott. “To strengthen the performance of our export industries, policymakers have to invest in a strategy to develop the manufacturing sector—this means fighting currency manipulation and developing our manufacturing sector by investing in research and development, training, and manufacturing extension services.”

As a share of gross domestic product, Japan spends roughly 23 times as much as the United States on manufacturing extension services. Similarly, despite having a GDP less than one-fourth that of the United States (21.7 percent of U.S. GDP in 2013), Germany spends approximately $2.4 billion on manufacturing research and outreach. A similar program in the United States is funded at less than 10 percent that level and has frequently been targeted for elimination in the Congressional budget process.