With the three largest U.S. competitors enjoying undervalued currencies, it is no surprise the U.S. suffers from chronic, large trade deficits.

The U.S. exports $2.2 trillion in goods and services annually, and these finance a like amount of imports. This raises U.S. gross domestic product by about $235 billion, because workers are a bit more than 10% more productive in export industries, such as software, than in import-competing industries, such as apparel.

Unfortunately, U.S. imports exceed exports by another $500 billion and that reduces demand for U.S.-made goods and services. With multiplier effects, the trade deficit is slashing at least $800 billion off GDP.

Many U.S. workers are pushed from high-paying jobs, not because they can't compete, but because the administration fails to take a tough stand against currency manipulation. And as many as 8 million workers can find no work at all, because of misguided U.S. trade policies, and wages remain depressed.

Domestic manufacturers have petitioned President Obama and his predecessors to take action, and economists spanning the ideological spectrum have suggested substantive measures that could combat currency manipulation and misaligned exchange rates.

The administration has complained to China and Japan about currency manipulation, but after years of U.S. inaction, they simply ignore U.S. warnings.

The administration continues to negotiate trade pacts that open U.S. markets to foreign competition but lack specific rules and penalties to address currency manipulation. Until an American president is willing to ensure free trade in goods is matched by free trade in currencies, the U.S. economy will endure anemic growth and workers will suffer high unemployment and low wages.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
Professor Peter Morici, of the Robert H. Smith School of Business at the University of Maryland, is a recognized expert on economic policy and international economics. Prior to joining the university, he served as director of the Office of Economics at the U.S. International Trade Commission. He is the author of 18 books and monographs and has published widely in leading public policy and business journals, including the Harvard Business Review and Foreign Policy. Morici has lectured and offered executive programs at more than 100 institutions, including Columbia University, the Harvard Business School and Oxford University. His views are frequently featured on CNN, CBS, BBC, FOX, ABC, CNBC, NPR, NPB and national broadcast networks around the world.

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