Third Way gets it wrong on US-South Korea trade deficit
Writing for the centrist think-tank Third Way, Jay Chittooran gets it very wrong when he attempts to school Donald Trump over Trump's concerns about the U.S.-South Korea trade deficit:
[S]ince KORUS [U.S.-Korea Free Trade Agreement] was enacted in March 2012 ... [t]he U.S. trade deficit with South Korea has increased substantially because the Korean economy has weakened considerably. And the U.S. dollar, which has appreciated some 20% since mid-2014, has made U.S. goods more expensive abroad, which means fewer American goods are being bought.
This is nonsense.
In 2012, South Korea's economic growth was 2.3%. It increased, not decreased, to 2.9% in 2013, 3.3% in 2014, and 2.6% in 2015.
By comparison, the U.S.-South Korea trade deficit also increased from $17 billion in 2012 to $21 billion in 2013, $25 billion in 2014, and $28 billion 2015.
Thus, the actual relationship since 2012 between South Korea's real GDP growth and the U.S.-South Korea trade deficit is the exact opposite of that described by Chittooran. South Korea's economy has strengthened since 2012, and the U.S.-South Korea trade deficit has increased dramatically.
Consequently, we can toss out that erroneous claim.
And here is the U.S.-South Korea currency exchange rate over this time:
From early 2012 through late 2014, the South Korean won strengthened considerably against the U.S. dollar, yet the U.S.-South Korea trade deficit increased by 50%. The exchange rate in 2015 was about the same as in 2012, while the trade deficit ballooned by 65% over this time frame.
As a result, both approaches Third Way attempts to use as explanations for the exploding U.S.-South Korea trade deficit following the coming into force of the U.S.-Korea Free Trade Agreement are failures.