Trade Deficit Bounces Upward to $57 Billion
By Anjali Athavaley
Washington Post Staff Writer
Saturday, June 11, 2005; D01
The U.S. trade deficit increased to $57 billion in April, the Commerce Department said yesterday, bolstering concerns about the country's high and sustained appetite for imports.
The trade deficit hit an all-time high in February of $61 billion but declined in March to $53.6 billion -- a dip some analysts hoped was a sign that the United States' record imbalance between imports and exports was finally beginning to moderate.
But surging imports, driven by the price of oil and rising imports from China, pushed the trade gap back up by 6 percent in April.
The announcement could add fuel to a heated debate underway on Capitol Hill over the Central American Free Trade Agreement, a proposal that would lower trade barriers between the United States and five Central American nations and the Dominican Republic. Opponents of CAFTA fear that the agreement could further widen the trade deficit by causing a rapid increase in imports of goods such as sugar and textiles.
"I think Congress and the president can make a U-turn on trade policy and, first of all, stop writing trade agreements such as CAFTA that pull the rug out from under the workers and the farmers and increase the trade deficit," said Sen. Byron L. Dorgan (D-N.D.).
But Rep. Kevin Brady (R-Tex.) argued that CAFTA would help lower the trade deficit by allowing the United States to sell more goods to Central America. The latest trade numbers, he argued, will enhance CAFTA's chances in Congress.
"Imports may increase, but what we sell would far exceed it," under the terms of the treaty, Brady said.
Total exports in April were $106.4 billion, a 3 percent increase from March. Imports rose 4 percent, to $163.4 billion.
The growing trade deficit is a result of more raw material imports such as crude oil, said Jason Schenker, an economist at Wachovia Bank.
"We do not make enough of the raw materials we need to function," Schenker said. "That's the biggest problem here."
Schenker predicts the trade deficit will continue to grow in the future.
"Some of the impact can be countered by capital inflows, but when the trade deficit gets bigger, that hurts our growth," Schenker said.
An analysis by UBS Investment Research attributes the rising trade deficit to April's high oil prices and a widening trade gap with China.
The U.S. trade gap with China grew by $1.8 billion, to $14.7 billion, in April, largely on the basis of increased U.S. imports of Chinese-made consumer goods. An analysis by Goldman Sachs attributes the narrowing of the gap in March to "lower imports from East Asia due to the Chinese New Year."
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