President Obama is expected to call for comprehensive trade and investment talks with the EU in his State of the Union speech tonight. An agreement that phases out tariffs, harmonizes product standards and reduces barriers to trade would have huge implications, far beyond economics.
The U.S. trade gap widened to just under $500 billion in 2010, but that obscures impressive growth in global sales of U.S. goods. And the outlook for 2011 is even better. Still, to reach a trade surplus, America must solve two serious problems.
The U.S. finds itself on the wrong side of the currency manipulation argument this week, as many G20 countries criticize the Fed's $600 billion bond buying plan, which could further devalue the dollar. World leaders say the move breaks the vow of unity made during the last G-20 summit.
U.S. economic growth slowed to an anemic 1.6% pace in the second quarter, due primarily to a worsening trade imbalance. The sole ray of light in the Commerce Department's report was that the downward revision was not as severe as economists had expected.
