The United States suffered the highest international trade deficit in its history last year as the difference between what Americans sold overseas and the foreign goods they bought soared to a record $148.5 billion, the Commerce Department announced yesterday.
The massive trade deficit marks a dramatic turnabout in U.S. international competitiveness over the past decade. Until 1977, the United States never ran a trade deficit that exceeded $10 billion.
The new trade deficit, which is $25.2 billion greater than the 1984 record of $123.3 billion, is expected to intensify congressional pressure for tougher trade laws to limit imports and increase overseas sales of U.S. goods.
Congressional Democrats yesterday signaled their intention to try to make the trade deficit an issue in this year's midterm races. The Democratic Leadership Council unveiled a new trade bill sponsored by Sen. Lawton Chiles (D-Fla.) and Rep. Daniel A. Mica (D-Fla.) and supported by such possible Democratic presidential contenders as former Virginia governor Charles Robb. The bill would toughen laws against unfair trade practices.
And in a mailgram advising Democrats that GOP candidates are vulnerable on trade, Rep. Tony Coelho (D-Calif.), chairman of the Democratic Congressional Campaign Committee, said, "This is a key jobs and pro-America issue for the Democrats in 1986."
Sen. Max Baucus (D-Mont.) called the deficit "a national disgrace," while Rep. Don Bonker (D-Wash.) said the figures show that President Reagan's trade initiatives "do not make a serious effort to address our spiraling trade problems."
Meanwhile, the Reagan administration released a favorable economic report yesterday showing that the index of leading indicators rose 0.9 percent in December, the strongest gain in four months. Higher stock prices, an increase in building permits and a longer factory workweek were cited by the Commerce Department as reasons for the gain in the index, which often foreshadows changes in overall economic activity. Details on Page C10.
The December trade deficit of $17.4 billion dashed optimistic predictions by some economists of a turnaround because of the recent fall in the dollar. Not only was the December deficit the highest of the year, but it was $5.4 billion greater than the $12 billion average for the first 11 months.
In the only direct administration comment on the trade deficit, White House spokesman Larry Speakes predicted the gap would start to narrow "no later than the second half of this year.
"We continue to believe that the combined effect of the declining dollar, coupled with stronger growth prospects overseas, should begin to show a reduction," Speakes continued.
But Jerry Jasinowski, executive vice president and chief economist of the National Association of Manufacturers, said the December trade deficit shows "the decline in the dollar has had no impact yet.. . . We won't see any meaningful trade improvement until late this year."
The high dollar is blamed by most economists for causing the surging trade deficit by raising the cost of U.S. products so they become uncompetitive overseas while making imports more attractive to Americans by lowering their prices.
The 1985 totals reflect the decline of America's manufacturing operations, once considered the strongest in the world. U.S. industries sold $145.4 billion in products overseas, but American purchases of foreign-manufactured goods were greater at $258.2 billion.
That $112.8 billion deficit in manufactured goods -- which as recently as 1980 was a positive factor in America's international trade picture -- is $24.26 billion higher than the 1984 deficit.
Much of the protectionist pressure in Congress comes from areas where manufacturing plants have closed or reduced production as the result of the flood of imports, which Coelho blamed for the loss of 2.5 million jobs since President Reagan entered the White House in 1981.
While the United States continued to run a positive balance in farm products, last year's $7.6 billion surplus was less than half of the 1985 surplus of $16.7 billion, an indication of stormy economic times for the American farmer.
In all, the trade figures showed 1985 imports totaled $361.6 billion, a $20.4 billion increase over the 1984 figure, while exports amounted to $213.1 billion, a decline of $4.8 billion.
Japan, which is expected to be the major target of congressional trade action, accounted for roughly one-third of the overall deficit. Japanese exports to the United States exceeded their purchases of American products by $49.7 billion, a marked increase from the $37 billion surplus Japan registered in 1984, which triggered a rash of anti-Japanese bills in Congress a year ago.
Over the past two years, the United States' traditional trade surplus with Western Europe has turned into a $27.4 billion deficit. The deficit was $22.2 billion with Canada, $13.1 billion with Taiwan, $11.6 billion with members of the Organization of Petroleum Exporting Countries, $6.2 billion with Hong Kong, $5.8 billion with Mexico, $5 billion with Brazil and $4.8 billion with South Korea.