Reconnecting with others

As long as US policy remains focused on deficits and exchange rates it will fail to make productivity gains necessary for growth

If one looks at the trade patterns of the global economy's two biggest players, two facts leap out.

One is that, while the United States runs a trade deficit with almost everyone, including Canada, Mexico, China, Germany, France, Japan, and South Korea, not to mention the oil-exporting countries, its largest deficit is with China. However, if trade data were recalculated to reflect the country of origin of various components of value added, although the general picture would not change, the relative magnitudes would: higher US deficits with Germany, South Korea, and Japan, and a dramatically lower deficit with China.