Not very long ago, few Americans cared about trade. As recently as 1970, made-in-America products ruled the world while imports posed little threat to most industries.
That position has changed radically over the past 15 years, as U.S. homes and factories have been invaded by imports while a high-priced dollar has hurt U.S. sales overseas.
Foreign goods amounted to only 11 percent of American purchases in 1970. Today, Americans are buying three times as much from foreign countries and that proportion is still growing.
The trend has been clear since 1979, but it accelerated over the past year as the U.S. trade deficit soared to a record $123 billion in 1984. It is expected to reach $150 billion this year.
What has brought the trade deficit so forcefully into the political arena now, however, is something closer to home: jobs.
Despite Friday's report that unemployment has dropped to its lowest rate in more than five years, and despite President Reagan's optimistic statements about the ability of the U.S. economy to create 8 million new jobs over the past three months, the manufacturing sector that was once considered the pulsing heart of America's industrial might has suffered.
Commissioner of Labor Statistics Janet L. Norwood said 210,000 jobs were lost in the manufacturing sector during the first eight months of the year. Since 1979, the peak year for manufacturing employment, 1.5 million jobs have been lost in that area. Using a standard Commerce Department measure that each billion dollars in trade means 25,000 jobs, a $150-billion trade deficit this year translates into the loss of 3.75 million jobs.
Even areas where the United States is considered most competitive, such as high technology and capital goods, fell prey to imports. This intensified a feeling in Congress and among businessmen that the Reagan administration must start getting tough on trade.
The United States once dominated world markets in capital goods -- a key area in any industrialized society. In 1970, imports took only 8 percent of the U.S. market; last year, the foreign share increased to 26 percent.
Even more significant was the erosion of U.S. domination of international high-technology sales, considered the key to this country's growth. For the first time last year, the United States reported a trade deficit in electronic goods as computer exports dropped 13 percent and trade in semiconductors slipped $2.9 billion into the red.
Thus, surpluses in high technology and capital goods -- once the mainstays of U.S. trade -- are no longer enough to pay for import binges of cars and consumer products. This is a reversal from four years ago.
The trade deficit is hitting across such a wide swath of American industries, in fact, that for the first time this year, executives of high technology and service companies joined heads of smokestack industries in complaining about soaring imports and the decline in U.S. sales overseas.
The trade deficit has also been a major drain on the economy and may be responsible for its current slowdown. Commerce Secretary Malcolm Baldrige said that deficit cuts gross national product as much as two percentage points.
"Had exports only remained constant instead of worsening since the middle of last year, the annual rate of GNP growth would have been 4.9 percent instead of 2.2 percent," the National Association of Manufacturers said in a report last month.
The major blame for America's poor trade performance is the high value of the dollar, which has risen 70 percent since 1980 despite the worsening trade balance, which should cause it to fall, according to conventional economic wisdom.
But there are other key factors, perhaps best illustrated by the emergence of Japan as the non-Communist world's second-largest economy. Its growth started with simple manufacturing in areas such as textiles, where low labor costs are important. But that country's growth soon could be seen in heavier industries such as steel and autos. Now, Japan is threatening the United States in high technology.
As Japanese industries became more advanced, newly industrialized countries such as Korea, Taiwan and Brazil used cheap labor to ship products from steel and shoes to small jet planes to the United States. And they took advantage of their third world status to protect their markets from products where the United States has a comparative advantage.