U.S. Trade Deficit Hits All-Time High in July

The U.S. trade deficit climbed to an all-time high of $31.9 billion in July as rising world oil prices pushed imports to a record level.

The Commerce Department said Wednesday that America’s deficit with China soared to the highest level ever recorded for a single country. The United States also set new records in its deficits with Japan, Western Europe and Canada. The July deficit was up 6.9% from a revised $29.8-billion trade gap in June.

Dave Huether, chief economist at the National Assn. of Manufacturers, said part of America’s trade woes, especially with Europe, reflected the dollar’s strength relative to the euro.

So far this year, America’s trade deficit is running at an annual rate of $353.7 billion, far above last year’s record of $265 billion.

The Clinton administration said that nearly half of this year’s deterioration in the trade balance has come from a surge in world oil prices, but pointed to signs of a rebound in U.S. export sales over the first seven months of this year.

“While the trade deficit is significantly greater than a year ago, U.S. exports have clearly been strengthening in response to stronger economic growth abroad,” Commerce Undersecretary Robert Shapiro told reporters. However, other economists predicted that the trade deficit will get worse in the next few months as any gains in exports are offset by the big jump in oil prices.

The value of crude oil shipments rose to a record $8.4 billion in July as the price per barrel hit a 10-year high of $27.76. This week, prices on world markets have climbed above $35 per barrel.

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U.S. Trade Deficit

The overall gap continues to reflect a deficit in the trade of goods and a surplus in services. Monthly balance in billions of dollars:

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July: -$31.9 billion

Source: Commerce Department