Well, if you’re a trade deficit worrier, time to get out the tranquilizers. The government reports that the trade deficit reached $666.2 billion in 2004– a record!!! This shouldn’t surprise–China’s trade surplus with the U.S. (meaning, we bought more of their stuff than they bought of our stuff) was huge, coming in at $162 billion, a 30 percent hike over 2003. And it ain’t going to get any better as long as (a) wages in China are kept appallingly low, (b) people can’t form real, independent unions and (c) the Chinese keep their currency artificially low (which means their stuff ends up cheaper to sell here, though I’m not one who believes that even changing the currency level will dramatically shift the prices of goods that are cheap because of cheap labor).

So, why worry, you might ask? As the Economic Policy Institute points out:

The U.S. must borrow abroad to finance its trade deficits. The recent decline in the dollar indicates that private foreign lenders are less willing to supply new credit. Foreign governments have been forced to step into the gap and finance a growing share of U.S. international debt. A rapid, uncontrolled decline in the dollar could push the U.S. economy into a sharp recession.

If you are really interested in the trade deficit, get this: as the graph here shows (if you click on it, you can see it much better), even though the dollar has been dropping (which, in theory, should make U.S. goods cheaper to the outside world and imports more expensive), the trade deficit has been growing. Part of that is from the rise in the price of oil–no matter the price, we are addicted to oil. So, here’s where energy independence and the trade deficit meet head-on: an economy less reliant on oil imports would mean a smaller trade deficit, all other things being equal.