The U.S. needs to take action to combat its trade deficit with China, which grew to more than $275 billion in 2010.

Economic analysts have recently touted an ‘export led recovery,’ pointing to increasing U.S. exports as a sign that we have turned the corner. While greater exports are good, they cannot be viewed in a vacuum, especially when imports have increased at a far greater rate. Even the president has bought into this mania, demanding a destructive trade pact with South Korea to boost exports.

One of the biggest causes of our trade deficit is our trade with China. Trade with China alone resulted in more than half of our entire trade deficit last year (which totaled $498 billion). This has cost the nation millions of jobs over the past decade. Economists estimate that a nation loses 9,000 jobs for each $1 billion it runs in trade deficits.

A big reason for this is not just lower Chinese labor rates, but a slew of dirty trade tricks China utilizes to game the international trading system. Government subsidies, value-added taxes, indigenous innovation policies (which require goods to be produced in China to be sold in China) and currency manipulation have given China several unfair advantages over its trading partners.

An anti-dumping case here and there on a business by business basis has not and will not be enough to deal with this issue. The U.S. desperately needs to implement countervailing duties on foreign currency manipulators. Our government’s refusal to go to bat for truly American businesses (and not the multi-national corporations that are merely ‘American’ in origin only nowadays) is allowing other nations to rob us blind.

A case in point is our nation’s top exports to China. A sizable share of U.S. exports to China is raw materials used to produce goods that are re-exported back to the United States. The top five industries producing exports are waste and scrap products, semiconductors, resins and synthetic rubber and fibers, basic chemicals and cash grains (the top export commodity). Such trade may be good for U.S. multi-national companies but provides few benefits for the domestic economy and jobs for its citizens.

A nation that only exports raw materials in exchange for manufactured goods fits the economic profile of a colony. Certainly, the U.S. is better and smarter than to allow this to continue to happen. We must demand sensible trade policy that produces jobs at home while promoting fair trade abroad.

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