updated 5/10/2007 8:45:44 AM ET 2007-05-10T12:45:44

The trade deficit shot up in March to the highest level in six months, driven upward by a big jump in imported oil. The politically sensitive deficit with China shrank as U.S. exports to that country hit an all-time high.

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The Commerce Department reported Thursday that the gap between what the United States imports and what it sells to the rest of the world rose to $63.9 billion in March, up 10.4 percent from the February level.

That was a bigger-than-expected deterioration in the trade deficit from the $60 billion deficit that analysts were forecasting. It reflected a big 17.6 percent jump in oil imports, which climbed to $24.6 billion, the highest level in six months.

In other economic news, the Labor Department reported that the number of laid off workers filing claims for unemployment benefits fell to 297,000 last week, a drop of 9,000 from the previous week.

So far this year, the trade deficit is running at an annual rate of $722.6 billion, slightly below last year’s all-time record of $765.3 billion. The deficit has set new records for five consecutive years.

Critics of President Bush’s trade policies contend that the administration has not done enough to protect American workers from unfair foreign competition from low-wage countries such as China.

Democrats used the soaring trade deficits and the loss of 3 million manufacturing jobs since Bush took office in their successful effort last year to regain control of both the House and Senate.

The administration, worried about a protectionist backlash in this country, has toughened its approach to China, imposing penalty trade tariffs in a dispute over Chinese paper imports and filing two new trade cases this year against the Chinese before the World Trade Organization.

Treasury Secretary Henry Paulson has pledged to keep up pressure on the Chinese to do more to open their markets to American goods. The two countries will hold the second round in a new series of economic talks later this month in Washington.

For March, the U.S. deficit with China dropped 6.4 percent to $17.2 billion, the smallest imbalance in 10 months, as U.S. exports to China set a record while imports of Chinese products declined slightly. Chinese officials announced on Wednesday a series of increased purchases of American goods in advance of the May 23-24 talks.

Even with the drop in March, America’s deficit with China is still running 20.4 percent higher than a year ago and there is rising pressure in Congress to impose economic sanctions on China unless it moves more quickly in such areas as allowing its currency to rise in value against the dollar.

The $63.9 billion overall deficit in March was the largest trade gap since a deficit of $64.6 billion in September. Exports rose 1.8 percent to $126.2 billion, the second highest level on record. Imports were up an even larger 4.5 percent — to $190.1 billion — also the second highest level on record.

The increase in exports reflected increased shipments of U.S. autos, consumer goods and oilfield drilling equipment. This helped to offset declines in sales of civilian aircraft, computers and machine tools.

The increase in imports reflected the big jump in America’s foreign oil bill, which reflected a higher volume of shipments and a rise in the average price of a barrel of crude to $53, up from $50.71 in February.

The deficit with Canada, America’s biggest trading partner, rose by 21.7 percent to $5.7 billion in March even as U.S. exports to Canada hit a record. The deficit with the European Union increased by 21.3 percent to $7.7 billion as both U.S. exports and European imports set records.

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

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