SPOTLIGHT ON TRADE : U.S. Heads for Worst Trade Gap in 5 Years : Economy: Imports climbed 3.4% in September, with Japan and China major contributors. Even Mexico was a factor.
A widening trade gap with both Japan and China and a rare deficit with Mexico in September pushed the United States toward its worst trade performance in five years.
Economists said the expanding U.S. trade gap of the past two years reflects a pickup in the American economy and the relative weakness of overseas economies, which has dampened foreign demand for American goods.
“It should not be until we get a pickup in foreign demand that we start to narrow this thing,” said economist Robert Brusca of Nikko Securities Co. International.
A recovering U.S. economy drew record imports of $49.8 billion, up 3.4% from a month earlier. Exports rose, too, but by only 2.1% to $38.8 billion, the Commerce Department said Friday.
The combination produced an 8.3% increase in the monthly deficit to $10.9 billion in September.
The report came as President Clinton met with Asian leaders in Seattle to promote expanded trade and only two days after the House approved the North American Free Trade Agreement on Administration promises that the pact would increase exports to Mexico.
Commerce Secretary Ronald H. Brown, in a statement from Seattle, said the latest trade figures “speak directly to the reasons why we are meeting with our Pacific trading partners.”
“Our imports from China reached another record level, as did our trade deficit with that nation. Our imports from Japan were the second-highest,” he said.
The politically sensitive deficit with Japan, which accounts for nearly half of the overall U.S. trade shortfall, grew slightly to $5.33 billion in September from August’s $5.26 billion. So far this year, the trade gap with Japan has grown 21% from the same period last year to $42.2 billion.
The trade gap with China, which is up about 24% so far this year at $16.7 billion, widened slightly in September to $2.51 billion. The deficit with all Pacific Rim countries totaled $8.5 billion.
The deficit with China totals $16.7 billion for first nine months, up from $13.5 billion a year ago.
Even as Administration officials were gearing up their come-from-behind campaign for NAFTA, the United States in September recorded a $101-million deficit with Mexico, the first since March, 1991, and the worst since December, 1990.
That whittled the year-to-date U.S. surplus with Mexico to $1.75 billion, compared to $4.4 billion for the same period a year ago.
Economist Bruce Steinberg of Merrill Lynch said the Mexican economy slowed this year because of uncertainty over NAFTA’s passage and the Mexican government’s anti-inflation program.
“With NAFTA a sure thing, Mexico’s economy is likely to accelerate and the U.S. trade balance should go back into surplus fairly soon,” he said.
So far this year, the deficit is running at an annual rate of $117.3 billion. That would be the worst performance since the $118.5-billion deficit in 1988 and a substantial deterioration from the $84.5-billion gap last year.
Trade was one of the few areas of strength in the U.S. economy during the 1990-91 recession; now it’s hurting growth and isn’t expected to improve until late next year or 1995. Slumps in Europe and Japan have cut into export sales, while Americans enjoying an economic upturn have increased their appetite for foreign goods.
In September, the gain in imports reflected increases of $216 million in autos and parts and $192 million in crude oil. Imports also rose substantially for jewelry, other petroleum products, iron and steel, computer accessories and civilian aircraft.
Exports were bolstered by gains of $476 million in gold; $378 million in food, especially fish and corn, and $124 million in telecommunications equipment. However, exports slumped $376 million for civilian aircraft.
