Tourism, Jet Sales Help Push Trade Deficit Down 17.1%
The U.S. trade deficit improved by 17.1% in February as a strong increase in foreign tourism helped push American exports of services to an all-time high, the Commerce Department reported Tuesday.
The deficit declined to $8.2 billion, an improvement of $1.7 billion from a revised January deficit of $9.9 billion. The gain reflects strength in goods as well as services, as sales of civilian aircraft rebounded sharply.
The Clinton administration was quick to cite the improvement as evidence that its trade policies are working, amid charges from political opponents to the contrary.
“Our trade deficit improved with every region of the world,” Commerce Secretary-designate Mickey Kantor told reporters. He said the improvement reflects in part the intensity that President Clinton has brought to the effort to “promote trade and make sure we compete and win in world markets.”
Clinton took office vowing to make trade deals a top priority of his foreign policy. But despite a big global trade deal, a free-trade pact with Mexico and Canada and 21 separate agreements with Japan, the overall deficit has skyrocketed, climbing from $39.5 billion in 1992 to $111.5 billion last year.
Kantor and other administration officials contend the deficit would have been even worse without the administration’s strong push to open U.S. markets, and they predicted better days ahead as the economies of America’s major trading partners start to improve.
Even with the February improvement, the trade deficit so far this year is running at an annual rate of $108 billion, little changed from last year.
For February, the politically sensitive deficit with Japan rose 2.7% to $3.9 billion. The deficit with China was the second-largest, as usual, at $2.4 billion, although that was 11.4% below the January figure.
Acting U.S. Trade Representative Charlene Barshefsky, who appeared with Kantor, served notice that the administration is prepared to enforce U.S. trade laws if China does not “take action expeditiously” to crack down on piracy of American computer programs, movies and records, which U.S. companies contend cost them $2.3 billion last year.
She refused to comment on published reports that the administration was prepared to publish a list of economic sanctions against China by mid-May if there was no progress.
The trade report shows that exports of goods climbed 1.4% to $49.7 billion in February, the second-best showing on record, whereas exports of services were up an even sharper 3.3% to $18.4 billion, an all-time high, a gain that reflects a surge in foreign travel in the U.S.
Imports of goods dropped by 0.9% to $63.5 billion, whereas imports of services were up 1.4% to $12.8 billion.
The big increase in U.S. exports of goods was led by a rise of $743 million in sales of civilian aircraft. That was followed by a $108-million increase in sales of American tobacco products abroad and a gain of $102 million in sales of oil drilling equipment.
The decline in imports was led by a drop of $583 million in oil shipments, which fell 13.8% to $3.64 billion, and a decline of $156 million in shipments of foreign computer chips.
Imports of foreign cars declined by $22 million, but exports of American cars, something Clinton highlighted on his trip to Japan last week, were also down $70 million, leaving America’s car deficit at $5.3 billion.
America had a deficit of $1.3 billion, 3% higher than January. But the deficit with Canada, America’s biggest trade partner, fell 27% to $1.4 billion, the smallest imbalance since July.
Jerry Jasinowski, president of the National Assn. of Manufacturers, said, “The best is yet to come on trade,” and he predicted that U.S. exports will advance by 11% this year as demand strengthens in Europe, Latin America and Asia.
Meanwhile, Jasinowski said, small manufacturers expect continued slow growth in their businesses this year on several fronts, including jobs, wages, sales and profits.
“Our small member companies expect a gradual slowdown in investment and slow gains across the board in 1996,” Jasinowski said in discussing the group’s annual survey of manufacturing executives.
The survey “shows a pretty mixed picture on the economic front,” he said. Some companies are doing well, having picked up from the winter doldrums, although others are quite uncertain about the economic outlook, he said.
“A lot of the indices are either tapering off or staying about where they were because of uncertainty in the general economic environment,” Jasinowski said.
Of those surveyed, 41.5% said they expect to increase full-time jobs this year, and 12.3% plan to reduce employment.
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Trade Deficit
Monthly overall deficit in trade and services, in billions of dollars:
Feb. 1996: -$8.19
Source: Commerce Department
