IE 11 is not supported. For an optimal experience visit our site on another browser.

Trade deficit swells to record $46 billion

The trade deficit swelled to an all-time high of $46 billion in March as a stronger U.S. economy stoked Americans’ appetite for foreign-made cars, TVs and other goods.
/ Source: The Associated Press

The trade deficit swelled to an all-time high of $46 billion in March as a stronger U.S. economy stoked Americans’ appetite for foreign-made cars, TVs and other goods.

Although imports grew faster than exports, sales of U.S. goods and services to other countries also climbed in March, to their highest level on record. This was encouraging news for U.S. manufacturers and exporters.

The trade gap reported by the Commerce Department on Wednesday was 9.1 percent bigger than the $42.1 billion deficit posted in February.

Imports of goods and services came to a record $140.7 billion in March, representing a 4.6 percent increase from the previous month. The U.S. economy’s resurgence is feeding demand for imports.

Exports, meanwhile, totaled $94.7 billion, also their best month on record. That marked a 2.6 percent advance from February and reflects in part better demand from overseas where economies also are improving.

Even though exports gained ground in March, the mushrooming trade gap and the loss of U.S. jobs have been lightening rods for Democrats who hope to use them as campaign issues against President Bush.

Since Bush took office in January 2001, factories have lost 2.74 million jobs.

Trade, the migration of U.S. jobs overseas, is among the hot-button issues that Bush and presumptive Democratic presidential nominee John Kerry have jousted over.

U.S. manufacturers, hardest hit by the 2001 recession, are finally getting back on firmer footing. Over the last three years, they have had to cope not only with hard economic times at home and abroad but also have had to compete with a flood of imports.

In March, imports of automobiles and parts came to $19 billion, a record. Imports of consumers goods, including TVs, toys and clothing, totaled $31.3 billion, also an all-time high.

U.S. exporters also posted gains. Exports of U.S.-made cars and parts totaled $7.2 billion in March, a record. U.S. exports of consumer goods, including pleasure boats and tobacco products, also registered all-time highs in March as did U.S. sales of industrial supplies.

America’s politically sensitive deficit with China widened to $10.4 billion in March. But U.S. exports to the country totaled a record $3.4 billion.

U.S. manufacturers contend that China is deliberately undervaluing its currency, the yuan, by as much as 40 percent, giving that country a big trade advantage when competing with U.S. companies and contributing to the loss of U.S. jobs.

The Bush administration has been pressing Beijing to stop linking its currency to the dollar and to let the value of the yuan be set in open markets.

Last month, the administration announced that it would not launch unfair trade investigations into China’s currency practices and alleged violations of labor rights — a decision that drew criticism from Democrats and some Republicans in Congress who represent states that have suffered big losses of factory jobs.

Instead, the administration said it would continue to pursue a strategy of diplomatic engagement with China on the currency matter and to open the country’s markets more to U.S. companies wanting to do business there.

The trade report also showed that the United States’ trade deficit with Japan widened a bit — to $6.7 billion in March. However, U.S. exports to the country — at $5.1 billion — were the highest since March 2001.

The $5.6 billion trade deficit with oil-producing countries, including Saudi Arabia and Venezuela, was the highest on record.

The average price of imported crude oil rose to $30.64 a barrel in March, the highest since February 1983, another factor in the yawning trade gap in March.

The U.S. trade deficit with Canada grew slightly to $5.1 billion in March. U.S. exports to Canada came to $17.2 billion, a record. Imports from Canada to the U.S. also were at record at $22.3 billion.