Do bilateral trade deficits matter?

money.jpg The US administration seem to think so as the recent figures on the trade deficit was published earlier this week. The protectionist face is thus again creeping forward in US society and politics.

"The US administration warned on Tuesday it was heading for a confrontation with China over bilateral economic relations if Beijing did not move immediately to open its markets to American imports.

Carlos Gutierrez, commerce secretary, delivered a sharply- worded speech just a month before a visit to Washington by Hu Jintao, the Chinese president.

He said the US had almost run out of patience waiting for China to take significant steps to reduce its ballooning $200bn trade surplus with the US.


Mr Gutierrez said: “China’s failure to address economic frictions will have consequences.

“Without concrete results, the administration, and the American people, may be forced to reassess our bilateral economic relationship.”

He warned of rising anger in Congress, where support is growing for trade action against China. “Without results...Congress may go down a path that none of us wants.”"