WASHINGTON (AP):
THE US trade deficit widened by a record amount in March as exports of US aircraft and other manufactured goods fell while American purchases of foreign consumer goods from toys to clothing soared.
The Commerce Department said yesterday that the trade imbalance jumped by 16.1 per cent in March, to US$31.2 billion.
That represented a US$4.3 billion widening from February's deficit of US$26.9 billion, the largest one-month deterioration in trade on record. The overall deficit in March was the largest since a US$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 George W. 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 US$368.9 billion, up 39 per cent from 1999.
So far this year, the deficit is running at a slightly lower pace of US$365 billion and many economists believe the deficit will improve this year as the slowing US 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 per cent to US$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 per cent in March to US$89.5 billion.
The weakness was led by a US$1.6 billion decline in sales of capital goods, with shipments of telecommunications equipment down by US$483 million and sales of commercial aircraft off by US$310 million.
The increase in imports was led by a sizable US$2.7 billion rise in demand for consumer goods, which pushed imports in this area up to US$25.3 billion, led by increased demand for toys, clothing, televisions and VCRs.
Demand for foreign cars rose by US$192 million to US$15.4 billion. But imports of foreign oil fell by 5.3 per cent to US$9.1 billion, the lowest level since January 2000. The average price of a barrel of crude oil dipped to US$22.76, the lowest since November 1999.
The deficit with China jumped by 13.1 per cent to US$5.7 billion in March even though US exports rose to US$1.9 billion, the second highest level on record with that country.
America recorded its biggest deficit last month with Japan, a US$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 US$2.8 billion.
The deficit with Canada, America's other partner in the North American Free Trade Agreement, edged down 2.9 per cent in March to US$4.3 billion.
The deficit with the European Union soared by 47.1 per cent to US$4.8 billion in March.
