U.S. Trade Hits Record Deficit of $33.4 Billion

The U.S. foreign trade deficit hit a record $33.4 billion from April through June as oil imports surged while farm exports took a nose dive, the government reported Wednesday.

The Commerce Department said the trade deficit grew by 12.8% from the first three months of the year, when the gap between imports and exports was $29.6 billion.

The new report on merchandise trade paralleled figures released last week showing an even larger deficit of $37.9 billion for the April-to-June quarter. The new report shows a lower deficit because it omits such factors as military sales and the cost of shipping and insurance.

The latest gloomy statistic was certain to heighten calls for congressional action to protect domestic manufacturers from the flood of imports.

But Commerce Secretary Malcolm Baldrige reiterated the Administration’s position that the proper way to deal with the country’s trade problems is to reduce the value of the dollar by getting federal budget deficits under control.

“The budget resolution recently passed by the Congress is only a first step and further cuts in spending must be enacted to bring the deficit under control,” he said.

Huge budget deficits have kept interest rates at higher-than-normal levels, thus attracting overseas investment, which has in turn kept the dollar at high levels.

Baldrige noted that, while the dollar has been declining recently, those declines will not have an immediate impact on the trade deficit since buying patterns respond more slowly to shifts in exchange rates.

A strong dollar makes U.S. goods more expensive and tougher to sell overseas while making imports cheaper and more attractive to American consumers.

The $33.4-billion April-to-June deficit topped the old record of $32.5 billion set during the July-to-September quarter last year.

The record came from a 1% rise in imports, putting them at a level of $86.3 billion, and a 5% drop in exports, which fell to $52.9 billion.

During the past year, total exports have declined more than 3% and are currently below their 1980 levels. Imports, however, have ballooned by 39% since 1982.