Trade Deficit Hits Another Record in June

The U.S. trade deficit climbed to a record $30.62 billion in June as soaring oil prices offset the benefit from stronger exports while shortfalls with China and Canada hit new highs, the Commerce Department said Friday.

The June deficit was up 1% from a revised $30.31-billion deficit in May, which was originally reported as a $31.04-billion shortfall.

Led by computers, exports gained 4.6% during June to an all-time high of $90.56 billion, while imports were up 3.7% to $121.18 billion, which was also a monthly record.

The June deficit figure was slightly less than the $31.15-billion gap Wall Street economists had forecast.

Imported oil prices, which had eased in May, reversed course and climbed to $26.65 a barrel in June--the highest price in a decade--as the cost of imported energy products hit a record $10.3 billion.

Analysts warned that a growing trade deficit is a potential weak spot for the U.S economy. If the United States continues to send overseas more dollars to pay for its imports than it garners from its exports, this could hurt the dollar’s value and make foreign investors wary of holding dollar-based investments.

The June deficit with China grew to a record $7.22 billion from $6.31 billion in May, while the shortfall with Canada widened to a new high of $4.34 billion from $3.72 billion in May. The trade deficit with major oil-producing countries that make up the Organization of Petroleum Exporting Countries climbed to a record $4.58 billion in June from $4.12 billion in May.

Costlier imported oil is a troubling development for U.S. industry because it is a basic cost that can affect prices of manufactured goods. The June price of $26.65 a barrel was the highest since $29.51 in November 1990, when the U.S. economy was in its last recession.

The report on the U.S.’ worsening trade situation is one of the final measures of the economy’s performance before Tuesday’s meeting of Federal Reserve policymakers to consider interest rate strategy.

The U.S. central bank is widely expected to keep rates steady in the belief that other gauges of consumer demand point to some easing in the pace of growth.