U.S. Trade Deficit Up in April
The trade deficit is rising again after two months of declines, pushed by oil prices and a flood of imports from China. Analysts warned that global oil prices above $70 a barrel would swell the deficit more in coming months.
The Commerce Department reported Friday that the gap between what the United States sells abroad and what it imports rose to $63.4 billion in April, 2.5% higher than the March imbalance of $61.9 billion.
The trade deficit fell in February and March after hitting an all-time high of $66.2 billion in January.
Although economists noted that the April deficit was smaller than the $65 billion that had been expected, it was still the sixth-largest imbalance on record. They said deficits in coming months were likely to be worse given the jump in global crude oil prices.
The April deterioration in the deficit came from a $1.44-billion increase in America’s foreign oil bill, which rose to $23.8 billion. That reflected a big jump in crude oil prices, which overwhelmed a drop in volume.
Through the first four months of this year, the trade deficit is running 12.9% above the same period a year earlier, putting the country on track to run up a record trade deficit for a fifth straight year. Last year’s deficit was $716.7 billion.
Critics of the administration’s trade policies seized on the new imbalance as further evidence that President Bush’s strategy of striking free-trade deals with countries around the world was not working and was contributing to a loss of nearly 3 million manufacturing jobs since Bush took office.
“These figures are a jarring reminder that our nation needs a new approach to its trade policy,” said Rep. Benjamin L. Cardin (D-Md.), the top Democrat on the Ways and Means trade subcommittee.
Sen. Byron L. Dorgan (D-N.D.) said the new deficit figure highlighted the “total failure of U.S. trade policy” and indicated that the country was handing more than $2 billion a day to foreigners to cover the trade gap.
But new U.S. Trade Representative Susan Schwab said the country’s trade picture was “much less dire” than critics were contending. She noted that the overall economy was performing strongly with unemployment dropping to 4.6% in May, the lowest jobless rate in nearly five years.
The increase in the April trade deficit reflected a 0.7% rise in imports, which climbed to $179.1 billion, the second-highest level on record. In addition to a higher oil bill, imports of autos and auto parts were up and shipments from China of consumer goods such as furniture, televisions and toys all rose.
That helped to push America’s total deficit with China to $17 billion in April, up a hefty 9.4% from March. That was likely to add to pressure in Congress to try to force China to revalue its currency as a way of helping narrow the deficit.
U.S. manufacturers contend that China’s currency is undervalued by as much as 40%, making Chinese goods cheaper for Americans and U.S. products more expensive in China.
