- Mar 8, 2006
Auto parts make a significant contribution to trade deficit
OK, so maybe that's a contender for "Most Obvious Headline of the Year", but unfortunately, this simply points to how true it is. In 2005, auto parts contributed over $37B to the United States' trade deficit, which was up 20% from one year ago. On behalf of all of those in this country's auto industry, we say "ouch!"
Disappointingly, the increasing production of vehicles in the US by "transplants" (foreign manufacturers) resulted in a spike in the number of parts purchased from Japan during the past two years. To no one's surprise, there was also a substantial increase in the dollar value of components obtained from China, Korea, and Mexico... and it would appear that we blame for that trend should be spread pretty evenly among all the OEMs that manufacture cars in the US.
Barriers to entry in foreign markets - primarily tariffs - are said to be significant contributors to this particular problem. There's certainly a huge difference between so-called "free trade" and what any sane person would consider as "fair trade" when it comes to America's trade policy with some of the countries that contribute to this gap.
[Source: Automotive News]