August Trade Deficit Down : $9.9-Billion Total Due to Oil, Car Imports Decline
The nation’s merchandise trade deficit was $9.9 billion in August, the first loss under $10 billion since December, as oil imports fell and auto imports stabilized, the Census Bureau said Friday.
August’s slowdown in the deficit improved on July’s $10.5-billion total, which also was a big improvement from June’s $13.4-billion deficit, the second worst on record.
Past downward trends proved to be temporary, and analysts are expecting higher figures in some future months. So far in 1985, the monthly deficits have averaged $11.4 billion, heading for a record annual total as large as $160 billion.
But Commerce Secretary Malcolm Baldrige told Congress Friday he thinks the worst is over and that 1986 will see a lower annual trade deficit, perhaps as small as $130 billion.
Last year the nation lost $123.3 billion to foreign economies through trade in merchandise, a hemorrhage that has provoked a flood of protectionist trade legislation on Capitol Hill.
The cost of oil imports declined 7.6% in August to only $3.8 billion for the month, the least since March.
Bureau analysts said total auto imports for the first eight months of this year were worth $24 billion, 16.8% more than the $20.5 billion for the same period last year.
The total for August was only slightly larger than July, however, $2.87 billion compared to $2.85 billion. This year’s surge in auto imports was the expected result of a widening of the Japanese export targets with the lapse of the so-called voluntary restraint agreement.
Imports were worth $27.3 billion in August, 2.1% less than July. Exports managed a minuscule improvement, up 0.07%.
The report was unexpected good news for the Reagan Administration, trying to beat back the protectionist measures in Congress.
Of the nation’s major trading partners, only Canada generated a worse trade balance for the United States in August, at $1.5 billion, $209 million more than in July.
The trade deficit with Japan, at $3.7 billion, was $273 million less than in the previous month.
Deficit With Western Europe
The trade deficit with Western Europe was $1.2 billion, down from the $1.6 billion in July.
The monthly report records only trade in merchandise. When the nation’s small surplus in services sales are added in, the total deficit in all financial transactions is slightly less. But it was still big enough in the first half of the year to outweigh the nation’s remaining assets overseas, pulling the country into international debtor status for the first time since World War I.
At the current rate the United States will be the biggest debtor country of all sometime next year.
In an attempt to cut the trade deficit without resorting to more protectionism, the United States announced Sept. 22 a cooperative effort to devalue the dollar along with four rich countries. The dollar did slip lower this week, leading one top Administration official to say Friday, “We haven’t seen anything since last Sunday that disappoints us.”
On Capitol Hill, Commerce Secretary Baldrige said the figures “reflect the continuing erosion of our trading position worldwide.” He predicted this year’s deficit would reach as much as $150 billion. His prediction of a decline in the deficit next year is disputed by many private analysts who say that even a sizable devaluation of the dollar could take 18 months to have a major effect on trade.
