April 13, 2007 4:13PM

Can We Blame the Record Trade Deficit for Global Warming, Too?

An Associated Press story today on the latest trade deficit numbers noted as an aside, “The trade gap has set new records for five consecutive years, a period when the country lost more than 3 million manufacturing jobs.” 

Thoughtful people can disagree about the long‐​term implications of the trade deficit, but there is no evidence that the trade deficit itself is responsible for the recent drop in manufacturing employment. 

Manufacturing employment has been on a downward trend, not because of imports, but because of soaring productivity in the sector. In fact, overall manufacturing output in the United States continues to increase. American factories can produce more with fewer workers because the remaining workers are so much more productive. 

During the 1990s, the trade gap set new records for seven years in a row (1994–2000). That was also a period of robust domestic growth in which the country added almost a quarter of a million manufacturing jobs. 

As for the most recent string of record trade deficits (2002–2006), one could also describe that period as one when: 

… the real output of American factories grew by 14 percent. 

… the country added a net 6 million new jobs. 

… the unemployment rate fell from 5.8 percent to 4.5 percent. 

… annual real GDP grew by $1.5 trillion, or 15 percent. 

… the net household wealth of Americans grew from $38.8 trillion to $55.6 trillion. 

As I’ve written recently in a Cato Free Trade Bulletin, the reality behind the trade deficit numbers is more multi‐​faceted than the public discussion in Washington would lead us to believe.