A surge in oil imports and a flood of Chinese televisions, toys and computers helped to drive the U.S. trade deficit to an all-time high...
WASHINGTON — A surge in oil imports and a flood of Chinese televisions, toys and computers helped to drive the U.S. trade deficit to an all-time high in October.
The Commerce Department reported Wednesday that the gap between what the United States sells overseas and what it imports rose by 4.4 percent to $68.9 billion, surpassing the record of $66 billion set in September.
The United States incurred record deficits in October with most of its major trading partners including China, the 25-nation European Union, Canada and Mexico. This development is certain to increase protectionist pressures in Congress, with many lawmakers already unhappy with the Bush administration’s trade policies.
The worse-than-expected October performance was blamed in part on the Gulf Coast hurricanes. They curtailed domestic production of oil, chemicals and plastics, forcing companies to turn to overseas suppliers.
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Nigel Gault, an economist at Global Insight, a forecasting firm in Lexington, Mass., said the sharp deterioration in the deficit would shave about 1.1 percentage points from economic growth in the final three months of the year. He predicted it would come in at about 3 percent.
He also forecast that this year’s trade deficit would reach $730 billion, compared with the record of $617.6 billion last year. He predicted next year’s deficit would be an even worse $760 billion before the deficit finally begins to improve in 2007.
Critics pointed to the rising deficits as evidence that President Bush’s trade policies have failed to protect U.S. workers from an onslaught of imports made in China and other low-wage countries. These critics blame the trade deficits for the loss of 3 million manufacturing jobs in the U.S. over the past five years.
“Month after month, we see new record trade deficits that spell real trouble for the United States,” said Sen. Byron Dorgan, D-N.D. “Behind these deficits are massive numbers of American jobs lost to foreign countries.”
The administration is pursuing free-trade deals with individual countries and negotiating a new global-trade agreement under the auspices of the World Trade Organization. Critics say that approach is not working.
“We just don’t see how current U.S. strategy is going to reverse these very dangerous trends,” said Alan Tonelson, a research fellow at the U.S. Business and Industry Council. The group represents mainly small U.S. manufacturing companies.
Treasury Secretary John Snow said the key to improving the trade deficit was to get Europe and other major trading partners to boost their economic growth. That way, they could buy more U.S. exports.