The U.S. trade deficit hit a 15-month high of $40.4 billion in March, due mostly to higher prices for imported oil, a continuing appetite for Chinese goods, and a strengthening of the dollar against the euro, making U.S. goods more expensive in the European Community.
The Commerce Department is projecting the 2010 deficit to rise significantly from 2009’s eight-year low. But, putting an optimistic spin on the report, analysts say the deficit points to a stronger economy as demand increases for U.S. goods and products.
Continuing as a bright spot in the export picture is agriculture. The USDA, in its February World Agricultural Supply and Demand Estimates, is forecasting exports for fiscal 2010 at $100 billion, an increase of $2 billion from its November projection and $3.4 billion more than fiscal 2009.
The main driver for the stronger U.S. shipments in 2010 is soybeans — with record production in 2009, reduced competition from South America, and strong Chinese demand leading to record sales recently.
Cotton exports are also forecast higher due to stronger prices, greater global demand, and less competition from other suppliers. Stronger exports are forecast for livestock and dairy, more than compensating for lower poultry shipments. Corn and wheat exports are forecast lower, due to greater competition. “Soaring demand” from China, Mexico, and Canada is also pushing up exports of dried distiller’s grains, a by-product of ethanol production. Exports now account for nearly one-fourth of the entire agriculture gross domestic product and support nearly a million American jobs.
The top five export markets for U.S. agriculture will account for 61 percent of all exports in 2010, the USDA says. Canada and Mexico are the top two markets, with $16.1 billion and $14.1 billion, respectively. China is third, forecast at $11.7 billion; Japan is fourth, with $11.2 billion; and the European Union is fifth, with $7.8 billion.
The importance of exports to the U.S. economy has led the Obama administration to develop a National Export Initiative (NEI), with an extremely ambitious effort that seeks to double American exports over the next five years and boost the number of export-related jobs to two million.
“There have been previous endeavors by the U.S. government to elevate the importance of exports,” says Commerce Secretary Gary Locke, “but what sets this effort apart is that this is the first time the U.S. will have a government-wide export strategy with focused attention from the president and his cabinet.
“It will help build a stronger economic foundation and allow us to return to the type of sustainable growth that helped build the strongest middle class in history.”
The NEI, Locke says, will boost U.S. international competitiveness by creating an export promotion cabinet to oversee the expansion of both government programs and special financing for firms and farmers seeking overseas market opportunities, along with tougher enforcement of international trade laws.