Deficit widens as oil prices hit record
( AP )- The U.S. trade deficit grew larger in January as imports - including crude-oil prices - zoomed to all-time highs.
The latest snapshot of trade activity, reported by the Commerce Department on Tuesday, showed the country's trade gap increased to $58.2 billion. That was up from a trade shortfall of $57.9 billion in December and was the highest since November.
Imports of goods and services climbed to a record high of $206.4 billion in January. The United States' voracious appetite for imported crude oil, where prices skyrocketed to the loftiest on record, figured into the increasing demand for overall imports.
The trade gap widened even as exports of U.S.-made goods and services totaled a record high of $148.2 billion in January. The declining value of the U.S. dollar relative to other currencies such as the euro, is helping to make U.S.-made goods cheaper and thus more attractive to foreign buyers.
Economists were expecting the trade deficit in January to be a bit larger - growing to around $59 billion.
Still, rising energy prices are aggravating the nation's trade situation.
The average price of imported crude oil soared to a record $84.09 a barrel in January. That pushed the country's imported crude-oil bill to an all-time high of $27.1 billion in January.
The country's trade deficit with oil producing nations, including Saudi Arabia, Venezuela and Nigeria, grew to $15.5 billion in January, up from $12.6 billion in December.
Oil prices on Tuesday closed at a new record high of $108.75 a barrel. "The surge in oil prices to well above $100 (a barrel) will ensure that the oil deficit keeps widening in coming months," said Nigel Gault, chief economist at Global Insight.
On Wall Street, however, stocks staged a huge rally as a new effort by the Federal Reserve to help relieve a worsening credit crisis buoyed investors. The Dow Jones industrials jumped 416.66 points - its biggest one-day point gain since July 29, 2002.
Meanwhile, the United States' politically sensitive trade deficit with China widened to $20.3 billion in January, up from $18.8 billion in the previous month.
The Bush administration says free-trade policies that also make it easier for U.S. companies to do business in other countries is the best way to deal with the country's trade deficits.
"Congress needs to vote on the completed free-trade agreements with Colombia, Panama and South Korea to open these markets and level the playing field for U.S. exporters," said U.S. Trade Representative Susan Schwab.
Democrats, however, blame the president's trade policies for the trade gap and the loss of millions of U.S. factory jobs as U.S. companies move production to low-wage countries such as China.
Trade tensions with China over the last few years have intensified on a number of fronts. Beijing's currency policies have strained relationships. So have the recalls of Chinese-made goods - from toys with lead paint to defective tires and tainted toothpaste - which have raised questions about the safety of Chinese goods flowing into the United States.
Critics contend China is engaging in what they believe are unfair trade practices such as keeping the value of its currency artificially low against the dollar. That makes Chinese-made goods less expensive to U.S. buyers and makes U.S.-made goods more expensive in China. The administration has been prodding China to do more to let its currency rise in value.
The U.S. trade deficit with Japan decreased slightly to $6.592 billion in January, from $6.593 billion in December. The trade deficit with Canada, however, increased to $5.9 billion, up from $4.7 billion.