U.S. Suffers 2nd-Highest Trade Deficit : Trading Woes Blamed on Increased Imports of Passenger Cars, Oil

The United States suffered a $13.4-billion trade deficit last month, the second highest on record, as a big jump in demand for passenger cars and foreign oil added to the country’s trading woes.

The Commerce Department said the merchandise trade deficit--the difference between exports and imports--rose from $12.7 billion in May.

The new flood of red ink came from an 8.1% jump in oil imports and foreign goods such as Japanese cars, which swamped a slight gain in exports.

For the first six months of the year, the U.S. trade deficit totals $70.7 billion. Commerce Secretary Malcolm Baldrige has predicted that for all of 1985 the deficit will reach $140 billion to $150 billion, far above last year’s record of $123.3 billion.

Strong Dollar to Blame

The country’s trading problems are the principal reason that economic growth has slowed dramatically this year. For the first half of 1985, the economy advanced at a tiny 1% annual rate as U.S. manufacturers continued to lose sales to foreign competition.

Mostly to blame for the trade hemorrhage has been the strength of the dollar, which makes imports cheaper and more attractive to Americans while boosting the price of U.S. goods abroad.

The $13.4-billion June trade deficit came close to the record of $13.8 billion set last July.

Commenting on the near-record trade deficit, Baldrige said the dollar, which has fallen 12% since February, will have to fall much more to solve the country’s trade problems.

He said such a decline will occur if Congress takes “strong action” on reducing the federal budget deficit, which has required large amounts of foreign capital to finance it.

Largest With Japan

The country’s largest single trade deficit was incurred with Japan, a $4.57-billion deficit, which was the highest monthly imbalance on record.

Imports of cars from Japan totaled $1.7 billion in June, accounting for 27% of total Japanese imports last month.

U.S. exports rose a slight 0.1% in June after falling 2.1% in May. Even with the slight rise, exports remained depressed, totaling only $17.44 billion last month.

In a separate report, the government said sales of new homes dropped a slight 0.1% in June despite lower mortgage rates. Sales were at an annual pace of 669,000 last month, 5% above the level of a year ago.