China, not Canada, is top US trade partner
Updated: 2015-11-05 12:03
By Bloomberg(China Daily USA)
Slump in oil prices sends Canada's share down 11.6%
China is poised to become the biggest US trading partner this year, eclipsing Canada for the first time as the slump in oil prices reduces the value of energy exports for America's neighbor to the north.
Trade in goods with China reached $441.6 billion this year through September, exceeding the $438.1 billion balance with Canada for the first time in US Commerce Department data going back to 1985. Figures published Wednesday also showed that the US trade shortfall with China is now at an all-time high, fueled by record imports.
Crude oil is among Canada's biggest exports, and its price has collapsed to about half of its 2014 peak. That's helped send the value of its trade with the US so far in 2015 down 11.6 percent from the same time last year, even as the world's biggest economy buys more barrels.
"It's completely an oil story," said Jacob Oubina, senior US economist at RBC Capital Markets LLC in New York. "In nominal terms, yes, the trade with China overtakes Canada, but in real terms, it's very different. It's not economic activity or output. It's a price story all the way."
In September, the US imported 101.3 million barrels of crude oil from Canada, the most this year and the second-highest level in records going back to 2010, according to data from the Census Bureau. However, the $3.9 billion customs value of those imports was the second-lowest.
Meanwhile, as other emerging markets struggle to accelerate, China is increasingly dependent on US consumers buying its goods. Total trade this year with China is up 3.7 percent from the same nine months in 2014.
The US trade deficit in manufacturing hit a record $74.7 billion in September, according to an analysis of new Census Bureau data by RealityChek, a reliable blog on manufacturing and trade. That could become fodder for debate in the presidential election.
The record was spotted by Alan Tonelson, founder of RealityChek. Spotting records involves searching through historical trade data, since the Census Bureau doesn't make comparisons in its news releases.
The swelling of the manufacturing trade deficit is more evidence that while the overall US economy has recovered from the 2007-09 recession, the manufacturing sector continues to lag.
According to Tonelson, the previous high for the manufacturing trade deficit was $73 billion in August. He says the US appears headed for an annual record deficit in manufacturing.
The Alliance for American Manufacturing noted that US imports from China hit a record of $45.7 billion in September, and President Scott Paul said the inflow is "killing America's manufacturing recovery".