Trade Gap in Steep 20.5% Climb in Jan.

The U.S. trade deficit, bloated by a record demand for foreign oil, worsened dramatically in January, climbing 20.5% to $9.3 billion, the government said today.

The Commerce Department said most of the deterioration came from a 44% surge in oil shipments. The January deficit was up from a $7.7-billion imbalance in December.

The trade report for January was an ominous beginning for the new decade. Many analysts believe America’s trade woes will worsen in coming years as U.S. dependence on foreign oil grows.

For January, exports climbed to an all-time high of $32.1 billion, 4% above the December level.

However, this gain was swamped by a 7.3% surge in imports, which increased to $41.3 billion.

The trade deficit was the largest since a $10.1-billion imbalance in November.

The U.S. trade deficit has been improving for the past two years, falling to $109 billion last year, down 8% from 1988.

But many economists predicted the 1990 deficit could begin rising again because of the oil bill and gains in the value of the dollar. A stronger U.S. currency makes imports cheaper for Americans and U.S. products less competitive on overseas markets.

The huge 44% surge in oil imports did not come as a surprise, with analysts blaming the rise on December’s record cold weather, which caused oil companies to import heavily in January to restock depleted supplies.

The total volume of oil, 291,278 barrels, was an all-time high, topping a previous record set in August.

The American Petroleum Institute has reported that foreign oil accounted for a record 54% of consumption in January as domestic production fell to its lowest level in a quarter century.

Another factor swelling the deficit in January was a 31% surge in imports of clothing, which totaled $3.1 billion in January.

As usual, the deficit with Japan was the largest of any country. However, at $2.9 billion, it was at the lowest level since December, 1984.

The Bush Administration has been pressing the Japanese to do more to purchase U.S. exports as a way of reducing the huge annual deficit of $49 billion that America is running with Japan.

Michael Evans, head of a Washington forecasting company, said he was looking for the deficit for all of 1990 to total between $120 billion and $125 billion, which would make it the second worst imbalance in history. The all-time high was a $152.1 billion deficit in 1987.

“Without a weaker dollar, we are just not going to get an improvement in trade,” Evans said.