updated 3/9/2006 1:54:02 PM ET 2006-03-09T18:54:02

The U.S. trade deficit surged to another record as the country’s foreign oil bill climbed sharply, auto imports rose and Americans’ taste for imported wines helped increase the deficit in food products.

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The politically sensitive imbalance with China also rose in January, reflecting a flood of Chinese cell phones and clothing.

The Commerce Department reported on Thursday that the deficit jumped by 5.3 percent in January to an all-time high of $68.5 billion. The worsening of the deficit exceeded analysts’ expectations and was certain to provide ammunition for critics of President Bush’s trade policies.

Those critics contend that the president’s pursuit of free trade agreements around the world has exposed American workers to unfair competition from low-wage countries that has contributed to the loss of nearly 3 million American manufacturing jobs in recent years.

Unhappiness with foreign competition was heightened in recent weeks with the revelation that the administration had approved the sale of operations at six U.S. ports to a state-owned company in the United Arab Emirates. Opponents, arguing that the sale would represent a serious security threat, have moved to overturn that decision in Congress.

In other economic news, the number of newly laid-off workers filing claims for unemployment benefits rose to 303,000 last week, an increase of 8,000 from the previous week. It was the first time the level of jobless claims has been above 300,000 in eight weeks.

America’s trade deficit hit a record of $723.6 billion for all of 2005 and many economists believe this year’s imbalance will be even worse. The $68.5 billion January deficit in trade in goods and services surpassed the old monthly record of $67.8 billion set last October.

For January, U.S. exports of goods and services rose 2.5 percent to an all-time high of $114.4 billion. But this increase was swamped by a 3.5 percent rise in imports which also set a record at $182.9 billion. The trade deficit is the difference between what America imports and what it sells abroad.

The rise in imports reflected a 4.3 percent increase in America’s foreign oil bill which climbed to $24.6 billion as an increase in crude oil prices offset a drop in the volume of shipments. The average per barrel price for crude oil rose to $51.93, up from $49.76 in December.

Imports of foreign cars and auto parts rose by 5.6 percent to $22.7 billion. Imports of computers and consumer goods were also up. Demand for foreign food products climbed by 6.2 percent to $6.4 billion, reflecting increased demand for wine and other food products.

U.S. exports of industrial supplies, capital goods and autos all set records in January as American producers benefited from increased demand as many of America’s major trading partners showed stronger economic growth.

America’s deficit with China jumped 9.9 percent to $17.9 billion in January, reflecting a big increase in imports of cell phones, clothing, textiles and shoes. The administration is facing growing pressure to crack down on what critics see as practices that violate global trade rules and give Chinese companies unfair advantages over American firms.

America’s deficit with Canada, the country’s largest trading partner, jumped 11.1 percent to a record $8.9 billion, while the deficit with Mexico was up 8.8 percent to $4.6 billion. The deficit with the 25-nation European Union declined by 3.8 percent to $9.7 billion in January.

The Bush administration contends that the country’s huge trade deficits primarily reflect the fact that the U.S. economy has outperformed the rest of the world in recent years, boosting domestic demand while American exporters have had to battle weak demand overseas.

The administration is seeking to strike free trade agreements with countries around the world as a way to lower foreign barriers to U.S. exports. U.S. Trade Representative Rob Portman announced on Wednesday the administration will negotiate a free trade deal with Malaysia, following the announcement last month that it was launching free trade talks with South Korea.

Critics charge these deals open American workers to unfair competition from low-wage countries.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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