U.S. Trade Deficit Climbs 6.1% in June

The United States imported a record amount of oil in June, and shipments of Chinese clothing and textiles soared, pushing the nation’s monthly trade deficit to the third-highest level in history.

The Commerce Department reported Friday that the June deficit jumped 6.1% to $58.8 billion, compared with a May deficit of $55.4 billion. The politically sensitive deficit with China also set a record, sent higher by a 39.2% surge in Chinese clothing and textile imports.

Analysts said the new report highlighted two of the biggest threats to the economy -- soaring energy prices and the dangers that the widening trade gap with China could spawn a protectionist backlash in the U.S.

“The higher global oil prices go, the bigger the check we have to write to foreigners and that will be a growing weight on economic growth,” said Mark Zandi, chief economist at Economy.com.

He said he saw no way the deficit with China would be brought under control unless the Chinese agree to go much further than the tiny revaluation of their currency they announced last month.

Through the first six months of this year, the deficit with China is 32% higher than the same period in 2004, a year when the trade gap with China hit a record of $162 billion, the highest amount with any country.

Imports of clothing and textiles were up 39.2% in June from May and are 57.6% higher for the first six months of 2005, compared with 2004, reflecting the lifting of global textile and clothing quotas on Jan. 1. That helped to push the June deficit with China to a record $17.6 billion.

The U.S. textile industry says 25,000 jobs have been lost this year because of the surge in imports from China and they are appealing to President Bush for relief.

So far, the administration has re-imposed quotas on various types of trousers, shirts, underwear and socks.

And the administration announced Thursday that it would launch talks next week in San Francisco in an effort to get an agreement with the Chinese imposing comprehensive quotas, something that economists warn will drive up prices for American consumers.

The overall trade deficit is running at an annual rate of $686 billion this year, up from last year’s record of $617.6 billion.

And analysts are forecasting that not only will this year’s deficit set a new record but the trade gap in 2006 will be even higher, reflecting the rising oil bill, the surge in Chinese imports and a weak global economy that has hurt sales of U.S. exports.

In June, U.S. exports of goods and services did edge to a new record of $106.8 billion, up by $52 million, as sales of telecommunications equipment, aircraft engines and chemical fertilizers increased.

Imports, however, rose a much larger $3.44 billion to also set a record at $165.7 billion, reflecting an increase in both the price and volume of petroleum shipments and higher imports of toys, clothing and other consumer goods.

More than half of the trade deterioration in June reflected America’s surging foreign oil bill, which hit a record high of $19.9 billion, an increase of 9.8% from the May level, with the average price per barrel of imported oil climbing to $44.40, the second highest level on record.