U.S. trade deficit narrows slightly to $31.6 billion in March
Friday, May 17th 2002, 12:00 am
By: News On 6
WASHINGTON (AP) _ America's trade deficit showed a slight improvement in March as sales of American products overseas outpaced an increase in imports, which were driven higher by the biggest one-month jump in crude oil prices in nearly 12 years.
The Commerce Department reported Friday that the March deficit narrowed to $31.6 billion. That was a 0.4 percent improvement over the February trade gap of $31.8 billion, which had been the biggest imbalance in 10 months.
The strength came in a 0.6 percent rise in exports of goods and services, led by gains in foreign demand for commercial aircraft, American-made autos and auto parts and computers.
This offset a 0.3 percent rise in imports, led by a 15.7 percent jump in America's foreign oil bill, which rose to $6.83 billion.
That figure reflected a $2.62 increase in one month in the average price of a barrel of foreign crude oil, to $19.18. The jump was the biggest since a $4.45-per-barrel surge in October 1990 after Iraq's Saddam Hussein had invaded Kuwait.
For all of 2001, America's trade deficit shrank by 7.5 percent to $347.5 billion, down from an all-time high of $375.7 billion in 2000.
In the first three months of this year, the deficit was running at an annual rate of $367 billion, which would represent an increase from last year. Many analysts are predicting a rise in the trade gap this year because they expect the U.S. recovery from last year's recession will outpace economic growth in the rest of the world, meaning higher demand in this country for imports compared to more sluggish overseas demand for U.S. exports.
American manufacturers also see another culprit for the huge trade imbalance _ a U.S. dollar they believe is overvalued by up to 30 percent. That makes their goods more expensive in foreign markets and exposes them to competition in the United States from cheaper-priced foreign products. They say the high-flying dollar has cost a half-million manufacturing jobs over the past two years.
However, private economists say the strong dollar has given the United States many benefits, including lower inflation and the ability to attract foreign investments. So far, the Bush administration has resisted pleas from American manufacturers to abandon its support for a strong dollar.
However, President Bush in March did announce new tariffs of up to 30 percent on various steel products in an effort to shelter one politically important domestic industry from a flood of cheaper-priced imports.
The Bush administration, like the previous Clinton administration, has argued that on the whole, the best approach to trade policy is to tear down foreign barriers to American goods rather than erect higher U.S. barriers. It is pushing ahead in the Senate for a vote that will give the president the authority to negotiate new global and regional trade liberalization agreements, a power the president has lacked since 1994.
For March, Japan reclaimed its place as the country with which the United States suffered the biggest trade deficit, an imbalance of $5.7 billion. That was up 0.7 percent from the February level.
China, which has occupied the top spot for the past two years, fell back to No. 2 in March with a trade imbalance of $5.6 billion, down 13.4 percent from February. The administration is hoping China's entry into the World Trade Organization last November will force that country to tear down barriers that American exporters have long claimed are costing them billions of dollars in lost sales.
The overall deficit of $31.6 billion reflected export sales of $79.19 billion, up 0.6 percent from the February level. Exports of civilian aircraft, which often show big swings, climbed by $635 million to $2.49 billion during the month. Sales of industrial engines rose by $84 million while sales of autos and auto parts were up $149 million. Computer sales rose by $66 million. These gains helped to offset a $368 million decline in sales of agriculture products, which dipped to $3.93 billion, led by a drop of $227 million in soybean shipments.
Imports rose by 0.3 percent to $110.8 billion. In addition to the $928 million increase in oil imports, shipments of industrial machinery were up $143 million and purchases of foreign aircraft rose by $95 million. Those increases were offset somewhat by a $634 million decline in imports of foreign autos and auto parts.
The U.S. deficit with Mexico, the country's second-biggest trading partner, surged 27.2 percent to a record $3.46 billion. The deficit with Canada, America's other partner in the North American Free Trade Agreement, declined by 1.1 percent to $3.9 billion.