U.S. Foreign Trade Imbalance Widens, Government ReportsBy Art Pine
Los Angeles Times
The U.S. foreign trade deficit widened in July as Americans, resuming their spending spree in the face of continuing good economic times, stepped up purchases of imported goods, the government reported Thursday.
Commerce Department figures showed that the United States imported $10.3 billion more than it exported during the month, up from a revised $8.3 billion red-ink figure for June, and the largest monthly deficit since January.
Economists said the increase stemmed mainly from the fact that the U.S. economy has been stronger than those of its major trading partners, enabling Americans to buy more imports, while foreigners are buying fewer U.S. goods.
Nevertheless, the widening was expected to provide further fuel for opponents of President Clinton's proposed "fast-track" trade bill, who have been blaming the trade deficit on U.S. trade policies. The measure would enable Clinton to negotiate more free-trade agreements.
Thursday's report also showed a sharp increase in the U.S. trade deficit with Japan, which rose to $5.2 billion in July, up from $4 billion during June. By contrast, the U.S. deficit with Mexico fell, from $1.2 billion in June to $987 million in July.
The Clinton administration sought to put a good face on the trade statistics. Commerce Secretary William M. Daley said that while the overall deficit figure is higher, the trade balance is improving in the manufacturing and services sectors.
Thursday's reports showed that U.S. imports of foreign goods and services rose by $900 million, or 1.1 percent, to a record $87.7 billion in July. Meanwhile, exports fell by $1.1 billion, or 1.4 percent, to $77.38 billion. The overall deficit for June initially was estimated at $8.2 billion.
The increase brought the overall U.S. trade deficit back to the same level as the second half of last year, when it hovered between $10 billion and $11 billion. The deficit peaked at $11.6 billion in January and then had declined for most of 1997.
Analysts forecast that if the current trend continues, the trade deficit for the year could soar to $135 billion - up from $114.5 billion in 1996. The worst red-ink trade figure that the United States has posted was in 1987, when the deficit reached $152.9 billion.
The trade picture for July was helped somewhat by falling oil prices. The price of a barrel of crude oil fell to $16.50 over the month, from $17.07 in June. Petroleum imports account for an important share of overall U.S. imports.
Clinton sent his "fast-track" proposal to Congress on Tuesday, setting off a fierce political battle with liberal Democrats, who contend that the measure would not do enough to prod other countries into adopting strong labor and environmental standards.
The accords the administration is seeking would press other countries to reduce their trade barriers and allow in more U.S. exports and investment. The bill would require Congress to vote on those accords as they were negotiated and not try to amend them on the floor.