The U.S. trade deficit jumped to the highest level in 13 months in April as America's bill for foreign crude oil soared to an all-time...
WASHINGTON — The U.S. trade deficit jumped to the highest level in 13 months in April as America’s bill for foreign crude oil soared to an all-time high.
The Commerce Department reported today that the gap between what the nation imports and what it sells abroad rose by 7.8 percent to $60.9 billion, the largest imbalance since March 2007.
The growing deficit was driven by a $4.3 billion increase in crude oil imports, which jumped to a record $29.3 billion in April, as the average per barrel price rose to an all-time high.
The deficit for April would have been $11 billion lower if crude oil imports had averaged $60 a barrel instead of the record $96.81 a barrel.
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The cost of oil imports is expected to climb further in coming months given that crude oil has continued its relentless rise.
U.S. export sales totaled $155.5 billion in April, up 3.3 percent to an all-time high, reflecting big gains in sales of commercial aircraft, farm machinery, medical equipment and computers. But this increase was swamped by a 4.5 percent rise in imports, which also set a record at $216.4 billion, reflecting the huge increase in oil as well as big gains in imports of autos and consumer goods.
The April deficit was $4.4 billion higher than the March imbalance of $56.5 billion.
The deficit through the first four months of this year is running at an annual rate of $707.5 billion, up slightly from last year’s deficit of $700.3 billion, which was a 7 percent drop from 2006. The improvement last year came after the trade imbalance set records for five consecutive years.
Many economists are looking for the deficit to shrink again this year as a sharp economic slowdown in the United States cuts into consumer demand for imports and the weak dollar helps to boost U.S. exports.
The Bush administration has switched signals after tacitly accepting the decline in the dollar for years to help boost U.S. exports. Officials are now talking about the need for a stronger dollar, a reflection of the pain being inflicted on Americans by high gasoline prices. While a weak dollar makes U.S. exports more competitive on overseas markets, oil producers demand higher prices for crude oil, which is priced in dollars.
Heading to a weeklong visit to Europe on Monday, President Bush said the administration would like to see the dollar strengthen in value. Treasury Secretary Henry Paulson pointedly said in a separate interview that the administration was taking no tools off the table that it might use to manage the dollar’s value, including the use of government intervention to push the dollar’s value higher. This administration has never intervened in currency markets in its seven years in office.
However, when Bush was asked today about possible government intervention to prop up the value of the U.S. dollar, he essentially rejected the idea. Bush said he believed in a strong-dollar policy, but that world economies will end up setting the value of the dollar.
The politically sensitive deficit with China, which had fallen sharply in March, rose by 25.9 percent in April to $20.2 billion, reflecting higher imports of a wide range of Chinese products from cellphones to toys and games to televisions and other electrical appliances and clothing.
The United States and China will hold a fourth round of high-level talks on economic issues next week in Annapolis, Md., although there is little expectation of any breakthroughs on any of the various trade tensions that have been spawned by the surge in the deficit with China to all-time highs over the past several years.
The trade tensions with China have led to calls in Congress for adoption of punitive measures that would punish China for what critics see as unfair trade practices which have contributed to the loss of more than 3 million U.S. manufacturing jobs since 2001.
For April, the U.S. trade deficit with Canada, America’s biggest trading partner, jumped by 18.6 percent to $7.6 billion, the highest level since January 2006.
The deficit with Mexico rose by 14.2 percent to $6.8 billion while the imbalance with the European Union increased 14 percent to $8.5 billion. The deficit with the Organization of Petroleum Exporting Countries rose 10.5 percent to an all-time high of $15.6 billion.