Trade Deficit Up As Oil Imports Hit High
Friday, August 12, 2005; 9:48 AM
America's trade gap widened sharply in June as ever-galloping oil prices pushed petroleum imports to an all-time high.
The Commerce Department reported that the trade deficit -- the gap between what America sells abroad and what it buys -- grew more than expected in June to $58.8 billion, a jump of 6.1 percent over May. So far this year, the trade gap is running at a yearly rate of $686 billion -- 11 percent higher than last year's all-time record.
The government released the trade numbers as crude oil rose to a record for a fifth day, topping $66 a barrel. Gas prices in America were also on the rise at a time when many Americans are taking road trips in their cars for their annual summer vacations.
"The main story was oil," said Stephen Stanley, chief economist at RBS Greenwich Capital in an e-mailed commentary about the trade deficit numbers. "Volumes and prices both rose in June, so petroleum imports jumped sharply."
The trade imbalance is a political hot potato for the Bush administration. Critics are charging that the country's widening import-export chasm shows that the administration's much-trumpeted free trade policies aren't working.
The deficit with China, another politically sensitive issue, also set a record $17.6 billion in June. Already last year, America's deficit with China marked the highest imbalance ever recorded with any country, at $162 billion. And this year's gap is already running more than 30 percent over last year.
Much of the trade deterioration with China reflects a flood of clothing and textile shipments from China since the beginning of the year when global quotas expired. The administration is moving to re-impose quotas in several clothing categories after U.S. textile manufacturers complained about job losses and plant closings.
More than half of the overall trade deterioration in June reflected the nation's ever-growing foreign oil bill, which hit a record high of $19.9 billion, a 9.8 increase over May. And analysts predict the trade gap will grow even more in the coming months, as global oil prices continue a seemingly relentless climb.
The June deficit came as U.S. exports of goods and services rose to a record $106.8 billion on stepped-up sales of telecommunications equipment, aircraft engines and chemical fertilizers. Imports, however, also set a record of $165.7 billion, reflecting an increase in both the price and volume of petroleum shipments and higher imports of toys, clothing and other consumer goods.