U.S. Trade Gap Takes Biggest Jump in 4 Years
The U.S. trade deficit surged to $10.2 billion in March, its biggest monthly gain in nearly four years, as the nation’s economic recovery fueled demand for imported goods while deepening recessions in Japan and Europe depressed sales of U.S. exports.
The widening shortfall, disclosed by the Commerce Department on Wednesday, increases pressure on the Clinton Administration to push Japan and other U.S. trading partners to open their markets to U.S. goods.
March’s $5.3-billion imbalance with Japan, the highest in 5 1/2 years, accounted for half of the entire U.S. trade deficit.
The overall increase reflected a 29.1% jump over the $7.9-billion trade deficit in February--a figure that was revised from an earlier report of $7.2 billion--and could lead to a revision of figures that show a weak 1.8% rate of economic growth during the first three months of the year.
A $2-billion growth in exports was more than offset by a $4.4-billion increase in imports, which reached a record level of $49.2 billion.
Economists said the latest figures underscored concerns about a gradual widening of the trade shortfall in recent months. So far this year, the deficit is running at an annual rate of $103 billion, compared to $84.5 billion in 1992.
“There is clearly a trend toward a growing trade deficit,” said Jeffrey Schott of the Institute for International Economics, a nonpartisan think tank.
In the short run, the new figures, which exceeded many economists’ expectations, reflect the immediate impact of the recession on some of the leading U.S. trading partners, most notably Japan and Germany.
But in the long run, the weakening trade numbers demonstrate the problems the United States faces in selling its goods abroad and raises questions about the strength of the U.S. economic recovery, including the possibility that continued weakness in economies abroad will spread back to this country.
Unresolved trade problems, and the need to make progress in stalled global trade talks, are likely to be central elements on the economic agenda at the summit of the seven major industrialized democracies in Tokyo in July.
“Our major export markets are in a slump, and that puts a focus on the Tokyo summit to figure out a way to improve economic performances in the industrialized world,” Schott said.
“The trade numbers may suggest in July at the summit that Europe is going the wrong way,” said economist Rudiger Dornbusch of the Massachusetts Institute of Technology.
Still, the March figures alone are insufficient to force any policy changes, he said.
“You don’t change trade policy on the basis of one month’s figures,” Dornbusch said. “You use it conveniently to beat the Europeans and the Japanese over the head--especially the Japanese.”
The White House had no comment on the report. But Commerce Secretary Ronald H. Brown said the increase in the trade deficit with Japan demonstrates the need for that country to stimulate its economy and remove its barriers to greater purchases of U.S. goods.
His call, in a written statement, for “market-driven exchange rate corrections” as a step toward a slimmer trade gap between the United States and Japan led to a plunge in the value of the dollar against the Japanese yen on Wednesday.
The Clinton Administration had earlier tried to bring down the value of the dollar compared with the yen in an effort to make Japanese products more expensive in the United States and thus boost purchases of American-made products. Brown’s statement appeared to be a resurrection of that campaign.
The import surge included increases of $795 million in crude oil and other energy products, $409 million in autos and auto parts, $1.1 billion in non-automotive consumer goods, including clothing, toys, portable typewriters, televisions, VCRs and stereos.
After Japan, the largest deficit--a $1.46-billion gap--was with China. The U.S. trade surplus with Western Europe shrank to $437 million, from $1.4 billion in February, and the value of two-way trade between the United States and the 12 members of the European Community fell 13.1% in the first quarter of 1993 compared with the same period a year ago.
Meanwhile, the trade deficit with Canada, the United States’ largest trading partner, fell from $906 million to $639 million.
Willard A. Workman, vice president for international affairs at the U.S. Chamber of Commerce, said the growing deficits with China and Japan demonstrated the need to pay greater attention to efforts to open the markets in those countries.
The Commerce Department report comes one day after Japan’s report that its trade surplus grew dramatically in April to $10.25 billion, from $7.11 billion a year earlier, while its surplus with the United States climbed to $4.03 billion from $3.29 billion.
* DOW HITS RECORD: Blue-chip index soars 55 points as inflation concern drops. D1
The $10.2-Billion Gap
U.S. exports were up 5.6%, but they couldn’t match the 9.7% rise in imports.
Import figures exclude shipping and insurance (In billions) Trade deficit April 1989: $10.22 March 1993: $10.21 Imports In March 1993: $49.20 Exports In March 1993: $39 Import Leaders: Crude oil, Automobiles Export Leaders: Aircraft sales, Industrial supplies *
Major U.S. Trade Partners
A negative number indicates the United States had a trade deficit with the country while a positive number indicates the United States enjoyed a trade surplus. Figures are in millions of dollars.
March Feb. Year to date Canada -639 -906 -2,585 W. Europe 437 +1,415 +3,586 Britain +758 +594 +2,150 Germany -608 -587 +1,450 Japan -5,263 -4,129 -13,294 Mexico +299 +316 +993 China -1,461 -1,171 -4,209 Former USSR +118 +100 +364
Source: U.S. Dept. of Commerce
