U.S. Trade Deficit Leaps 77% in March : Commerce: The $5.8-billion gap is a sharp setback and could spell trouble for the fragile economic recovery.
The nation’s trade deficit surged 77% in March as consumers stepped up their purchases of imported goods and overseas sales of U.S. products sagged, the Commerce Department reported Wednesday.
The March deficit of $5.8 billion was a sharp setback, coming a month after the trade shortfall had dropped to its lowest level in nine years. Many economists had expected the news, however, noting that some of this country’s major trading partners are sinking deeper into an economic slump, making it harder for them to buy U.S. goods.
If the trend continues, analysts believe that it could spell trouble for the fragile American economic recovery.
“There’s a real risk of a stall here,” said David Wyss, an economist with DRI/McGraw Hill Inc. in Lexington, Mass. “It’s not panic time, but it’s worse news than expected.”
March exports fell by $700 million to $37 billion, while imports grew by $1.8 billion to $42.8 billion.
J. Antonio Villamil, the Commerce Department’s chief economist, played down the March figures, noting that the country’s trade performance still had shown a “significant improvement” in the first quarter. The trade deficit was $60 billion for the first three months of the year, down from $65.4 billion during the opening quarter of 1991.
First-quarter exports of $110.1 billion were the second highest on record, up 7.8% from the same period last year, Villamil said. But he also pointed out that the recovery hinges on growth in exports, with every $1 billion in overseas sales supporting an average of 19,100 jobs in the United States.
About 40% of the March increase could be attributed to a continued worsening in the balance of trade with Japan. During the month, the U.S. ran a $4-billion deficit with Japan, up from $3 billion in February.
As the U.S. economy picks up steam, “Americans are back at the shopping mall, and they are buying Japanese goods,” Wyss said. He added that the trade deficit is “getting to be very isolated. . . . It’s getting to be an Asian problem.”
Trade with Japan accounts for about two-thirds of the total U.S. trade deficit. By comparison, the United States is running a significant trade surplus with Western Europe, and its trade with Canada and Mexico is roughly in balance.
The figures were released as President Bush and Canadian Prime Minister Brian Mulroney--leaders of the world’s largest trading partnership--met at the White House to discuss the increasing economic tension between the two countries.
Canada and the United States are embroiled in a number of trade disputes, which some officials believe could jeopardize their 3-year-old free trade agreement. Last Friday, the U.S. Commerce Department accused Canada of unfairly subsidizing its timber exports, which could pave the way for the imposition of new tariffs.
Appearing with Bush in the Rose Garden, Mulroney said: “For some time, Canadians have been troubled and angered by the attitude adopted by some people in Washington on major trade issues. . . . The kinds of harassment that we’ve seen must stop.”
Bush, meanwhile, sought to ease the tension.
“I think we can do a better job of trying to avoid disputes,” the President said, but added that any differences between the two countries “are overwhelmed by common ground.”
