US trade gap hits record
The United States sucks in imports from around the world
The US trade deficit increased sharply in May, leading to
fears that the US economic boom may become
unsustainable.
The trade gap widened to $21.3bn, a new record and a
huge increase on the $18.5bn reported in April.
The dollar has been
weakening over the past few
days as traders feared the
rising trade deficit.
Half of the total deficit - the
difference between the
amount of imports and
exports - was caused by
deficits with just two
countries, China and Japan.
Imports were up 2.2%, with
oil leading the way. Oil prices
have soared as Opec has restricted output. The US
economy now imports nearly $100bn of goods each
month.
In contrast, it was only able to sell $77bn worth of goods
to the rest of the world, with falls in aircraft and auto
sales.
Bob Hormats of Goldman Sachs said that because the
US economy was so much stronger than other
countries, it was sucking in imports from abroad.
The US trade deficit is heading for a record of more than
$200bn for the year, well above last year's deficit of
$164bn.
Political problems
The growing trade gap poses a political problem for the
Clinton Administration, which is under pressure from
Congress to introduce more protectionist measures to
help US industry.
US manufacturing lost nearly 500,00 jobs in the past
year as imports have soared.
"To reverse this troubling trend in our trade deficit, we
should continue to promote stronger growth abroad and
ensure that foreign markets are open to American
products," said US Commerce Secretary William Daley.
The latest figures suggest to some economists that
imports might actually replace US production and slow
the growth of the economy.
"(It's) much wider than anticipated and I think what you
are looking at here is where trade is going to be a pretty
big drag on second quarter GDP growth," said John
Lonski of Moody's Investors Services.
The US has been involved in trade disputes with Europe,
Japan, Australia and Latin America this year - banning
lamb imports and steel, and introducing punitive tariffs to
force the EU to import its beef and bananas.
news.bbc.co.uk
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