The U.S. trade deficit soared to a record of $617.7 billion last year as Americans’ appetite for all things foreign from crude oil to imported cars hit all-time highs. The United States even rang up a deficit in farm goods as imports of wine, cheese and other food products hit a record.
The Commerce Department reported that the deficit for all of last year was 24.4 percent above the previous record, an imbalance of $496.5 billion in 2003. The U.S. deficit with China also set a record of $162 billion, up 30.5 percent from last year and the largest imbalance ever recorded with a single country.
The sharp worsening of America’s performance in trade was certain to spark new political criticism of President Bush’s economic policies. Democrats contend that the administration has not done enough to crack down on unfair foreign trade practices. These include China’s currency policy, which U.S. manufacturers believe has deliberately undervalued the yuan by as much as 40 percent, giving Chinese companies a huge competitive advantage over U.S. firms.
The trade deficit in December declined 4.9 percent to $56.4 billion. That compared to a revised November shortfall of $59.3 billion, which was still the all-time monthly high but down from a previously reported $60.3 billion.
The administration has argued that the U.S. deficits reflect the fact that America is growing at faster rates than the rest of the world, providing more demand for imported goods. But private economists worry that the deficit has reached such stratospheric levels that foreigners may decide they do not want to hold as much in dollar-denominated assets.
For all of 2004, U.S. exports of goods and services rose 12.3 percent to $1.15 trillion. But imports rose at an even faster clip of 16.3 percent, setting a new record of $1.76 trillion.
The demand for foreign goods was led by a 35.7 percent surge in foreign petroleum imports, which climbed to a record high of $180.7 billion, an increase that reflected not only increased demand but also surging petroleum prices, as global markets pushed oil prices to record levels. For the whole year, the average per barrel price for imported crude was $34.47, up from $26.98 in 2003.
Imports of foreign autos, industrial supplies and consumer goods all set records as did imports of food products, which climbed to $62.17 billion. U.S. exports of food products were also a record at $56.3 billion. But since U.S. shipments abroad were lower than imports, the country recorded a deficit in food categories of $5.8 trillion. It was the third straight year the United States has run a deficit in food, which long had been one of the few areas where the country could depend on surpluses.
U.S. exports did climb to an all-time high, helped in part by a 15 percent decline in the value of the dollar against other major currencies over the past three years. A weaker dollar makes U.S. products cheaper and thus more competitive on overseas markets.
For 2004, exports of food, autos and auto parts and consumer goods climbed to a record and the export of capital goods was at the highest level in four years.
The deficit with China was up 30.5 percent from the previous record for any country, a deficit of $124.1 billion with China set in 2003. The United States also saw large increases in the deficits with Japan, at $75.2 billion, Canada at $65.8 billion and the 25-nation European Union, where the deficit rose to $110 billion.