Trade Deficit in March Surges to $14.5 Billion

The United States’ foreign trade deficit widened to $14.5 billion in March as cheaper oil prices were overwhelmed by a record level of imports of manufactured goods, the government reported Wednesday.

The trade deficit jumped 16.3% over the February imbalance of $12.5 billion. The deficit with Japan jumped 27.5% to an all-time high.

For the first three months of the year, the trade deficit totaled $43.5 billion, 39% higher than the pace set last year.

Despite this surge, the Reagan Administration is maintaining that the deficit for all of 1986 will fall below last year’s record $148.5-billion imbalance. This forecast is based on a belief that the impact of a declining dollar and lower oil prices will narrow the deficit in the second half of the year.

Treasury Secretary James A. Baker III recently predicted that the trade deficit would decline to $125 billion this year, with $18 billion of the improvement coming from the dramatic plunge in oil prices.

The March report showed that America is already receiving substantial benefits from lower oil prices. The cost of petroleum imports dropped by 13% in March despite the volume of imported oil rising by 11%. The difference was explained by the fact that oil cost on average only $19.45 a barrel--28% below the price at the beginning of the year.

Imports, Exports Both Rise

This figure represented the lowest oil price since the summer of 1979, and analysts predict that it will fall further in coming months because the spot market price of oil has dipped to about $12 per barrel.

Even with the fall in the oil bill, total imports rose 10.6% in March to $33.4 billion. That big advance was attributed to a sharp increase in imports of foreign manufactured goods, which hit an all-time high of $25.3 billion.

U.S. exports were up as well, rising by 6.6% to $18.91 billion, their highest level in a year.

David Berson, senior economist at Merrill Lynch, a New York-based investment house, called this increase “reasonably good growth” and said it reflected the beneficial impact of the fall in the value of the dollar, which makes U.S. goods cheaper in foreign markets.

The rise in exports did not help American farmers, however. Exports of agricultural goods fell by 1.9% to $2.04 billion in March.

The rise in imports came about in part because of an 8.3% increase in imports of Japanese cars. Imports of all foreign cars were up 9.2%.

Biggest in History

The deficit with Japan, the largest with any country, rose to a record $5.5 billion in March, nearly 40% of the total U.S. trade deficit.

Baker and Commerce Secretary Malcolm Baldrige insisted Wednesday that America’s trading partners need to do more to spur growth in their countries and expand demand for U.S. products.

“During the last several years, the United States has served as the locomotive of world economic recovery. Our trade deficit has nearly quadrupled . . . creating severe pressures on our manufacturing sector,” Baldrige said in a statement. He urged other countries to “stimulate their economies in a non-inflationary way.”