TRADE deficit widens by record amount in March
Friday, May 18th 2001, 12:00 am
By: News On 6
WASHINGTON (AP) _ The U.S. trade deficit widened by a record amount in March as exports of U.S. aircraft and other manufactured goods fell while American purchases of foreign consumer goods from toys to clothing soared.
The Commerce Department said Friday that the trade imbalance jumped by 16.1 percent in March, to $31.2 billion.
That represented a $4.3 billion widening from February's deficit of $26.9 billion, the largest one-month deterioration in trade on record. The overall deficit in March was the largest since a $33.3 billion January imbalance.
Economists had been expecting the deficit to widen again following the unexpectedly big improvement in February, but not by such a large amount.
The politically sensitive deficits with Japan and China both increased, as did the imbalances with much of the rest of the world. America's deficit with Mexico hit an all-time high.
America's continuing trade problems represent a political challenge for President Bush, who is trying to overcome congressional resistance to granting him the negotiating authority he needs to strike a new free trade agreement with all the democratic nations in the Western Hemisphere, as well as to launch a new round of global trade talks.
While the Bush administration argues that American companies have no choice but to compete in the global economy, critics contend that lowering trade barriers subjects American workers to unfair competition from low-wage countries with lax environmental standards.
To support their case, the critics point to soaring trade deficits including last year's all-time high of $368.9 billion, up 39 percent from 1999.
So far this year, the deficit is running at a slightly lower pace of $365 billion and many economists believe the deficit will improve this year as the slowing U.S. economy draws in fewer foreign goods.
However, that pattern was not evident in March. Instead, imports, which had fallen sharply the month before, rebounded by 2.9 percent to $120.6 billion with the gains led by big increases in demand for foreign autos and other consumer goods.
Exports, which had been up in February, edged down 1 percent in March to $89.5 billion. The weakness was led by a $1.6 billion decline in sales of capital goods, with shipments of telecommunications equipment down by $483 million and sales of commercial aircraft off by $310 million.
The increase in imports was led by a sizable $2.7 billion rise in demand for consumer goods, which pushed imports in this area up to $25.3 billion, led by increased demand for toys, clothing, televisions and VCRs.
Demand for foreign cars rose by $192 million to $15.4 billion. But imports of foreign oil fell by 5.3 percent to $9.1 billion, the lowest level since January 2000. The average price of a barrel of crude oil dipped to $22.76, the lowest since November 1999.
The deficit with China jumped by 13.1 percent to $5.7 billion in March even though U.S. exports rose to $1.9 billion, the second highest level on record with that country.
America recorded its biggest deficit last month with Japan, a $6.2 billion. Last year, for the first time, America's deficit with China surpassed the imbalance with Japan, which for more than two decades had been the country with the largest trade imbalance with the United States.
The deficit with Mexico nearly doubled last month to a record $2.8 billion. The deficit with Canada, America's other partner in the North American Free Trade Agreement, edged down 2.9 percent in March to $4.3 billion.
The deficit with the European Union soared by 47.1 percent to $4.8 billion in March.