Oil Imports Widen U.S. Trade Deficit

Record-high oil imports widened the U.S. trade deficit sharply in March, the government said Tuesday, a factor economists said could weigh on U.S. economic growth and pressure the dollar.

Fears about the possibility of supply disruptions sparked an increase in oil prices ahead of the war in Iraq. The result was a record $9.1-billion crude petroleum import bill in March and a record $6.5 billion in imports from nations that belong to the Organization of the Petroleum Exporting Countries.

The Commerce Department said the rise in oil imports, coupled with a drop in civilian aircraft exports, pushed the March trade gap to $43.5 billion -- the second-highest on record and a 7.6% increase from February.

Analysts said the higher-than-expected figure could force the Commerce Department to trim its estimate of first-quarter growth from the 1.6% annual rate reported last month and would increase pressure on the dollar, which has been on a downward slide in currency markets for more than a year.

“When you see a trade deficit like this, it basically tells you there’s going to be a little bit more weakness in the overall economy,” said Banc One chief economist Anthony Chan.

The huge trade gap will hurt the dollar and then, over time, the dollar’s fall will boost U.S. exports, trimming the trade deficit, Chan said.

However, U.S. exports were only fractionally higher at $82.8 billion, as anemic overseas growth kept a lid on demand.

Imports from Western Europe hit record levels in March, even as France and Germany strongly opposed U.S. efforts in the United Nations to win a second resolution authorizing the use of force against Iraq. U.S. exports to Western Europe were the highest since May 2001.

Strained relations over the war have triggered threats of consumer boycotts on both sides of the Atlantic, but much U.S.-European trade is internal company trade, lessening the effect boycotts could have on the overall trade figures.