Trade deficit hits record
- From: pluto <pluto@xxxxxxxxxxxx>
- Date: Sat, 11 Mar 2006 06:58:31 +0800
March 10, 2006
Trade deficit hits record
It's up to $68.5 billion in January on foreign oil, auto imports.
By Martin Crutsinger
Of The Associated Press
WASHINGTON | Rising oil prices and Americans' seemingly insatiable appetite
for foreign goods ? from Chinese clothing to French wine and Japanese cars
? sent the U.S. trade deficit to another record.
The Commerce Department reported Thursday that the deficit jumped to $68.5
billion in January, 5.3 percent more than in December. Analysts had
expected the trade gap to worsen, given the surge in world oil prices, but
the increase caught them by surprise.
Lehigh Valley LocalLinks
''We shopped the world's markets until we dropped,'' said Joel Naroff,
chief economist at Naroff Economic Advisors. ''We bought a lot more of
everything, including capital and consumer goods, foods and motor
Analysts said that unless demand for imported goods slows, the U.S. could
produce a record annual deficit for the fifth year in a row, topping last
year's imbalance of $723.6 billion.
Critics contended the January deficit showed the failure of President
Bush's free trade policy that has contributed to the loss of nearly 3
million U.S. manufacturing jobs.
''The American people need a Congress and an administration that will get
tough on trade policy to rein in these runaway deficits,'' said Rep.
Benjamin Cardin of Maryland, the top Democrat on the House Ways and Means
subcommittee on trade.
The Clinton administration filed on average 11 unfair trade cases per year
before the World Trade Organization, he said, while the Bush administration
has filed only 13 cases in more than five years in office.
The trade report showed that the deficit with China jumped by 9.9 percent,
to $17.9 billion, in January. The increase reflected a big rise in
shipments of Chinese cell phones, clothing, textiles and shoes to the
America's $202 billion deficit with China last year was a record for a
single country. Many members of Congress want to penalize Chinese imports
unless Beijing stops what the critics believe are violations of global
''China has been trading unfairly since it joined the World Trade
Organization in 2002 and the administration has done nothing about it,''
said Sen. Byron Dorgan, D-N.D., on Thursday.
On Wall Street, the Dow Jones industrial average dropped 33.46 points to
close at 10,972.28 on Thursday.
The overall deficit in January surpassed the record of $67.8 billion set in
U.S. exports of goods and services rose 2.5 percent to an all-time high of
$114.4 billion. But this increase was swamped by a 3.5 percent rise in
imports, which also set a record at $182.9 billion.
U.S. exports of industrial supplies, capital goods and autos all set
records in January as American producers benefited from a rebound in
economic growth in Europe and Japan.
Japan on Thursday dropped its five-year policy of keeping interest rates at
rock-bottom levels. The move was seen as dramatic evidence that Japan
finally has defeated the deflationary pressures that had severely depressed
The rise in imports to the U.S. reflected a 4.3 percent increase in
America's foreign oil bill. It climbed to $24.6 billion as an increase in
crude oil prices to $51.93 per barrel offset a drop in the volume of
shipments in January.
Imports of foreign cars and auto parts rose by 5.6 percent to $22.7
billion. Imports of foreign food products rose by 6.2 percent to $6.4
billion, reflecting increased demand for imported wine and other foods.
Some analysts worried about the sizable and widespread increases in imports
of manufactured goods and what that might be saying about America's
''The January trends spotlight the continued decline of national
competitiveness in industries of the future such as high-tech,'' said Alan
Tonelson, a research fellow with the U.S. Business and Industry Council, a
manufacturing trade group.
America's deficit with Canada, its largest trading partner, jumped 11.1
percent, to a record $8.9 billion. The deficit with Mexico was up 8.8
percent, to $4.6 billion. The deficit with the 25-nation European Union
declined by 3.8 percent, to $9.7 billion.
America's deficit with India shot up by 61.3 percent in January to $1.26
billion. Seeking to address growing anxiety about the loss of service
sector jobs to India, Bush said on a visit to that country last week that
the answer was not new protectionist barriers but better education to train
Americans for 21st century jobs.
The administration has continued to pursue free trade agreements as a way
of lowering barriers to U.S. exports, announcing this week that it will
soon start talks with Malaysia.
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