Trade gap widens as exports fall off
Commerce says deficit is the third-highest on record
BY RICHARD LAWRENCE
JOURNAL OF COMMERCE SPECIAL
WASHINGTON -- The U.S. trade deficit jumped in November to $15.5 billion, as imports hit record highs and exports fell, the Commerce Department reported Thursday.
The deficit was the third highest on record, Commerce said, reversing the declining deficits in September and October.
It virtually assured that the combined goods and services deficit in all of last year approached $170 billion, an all-time high. This would represent about a 50% larger deficit than in 1997.
A further worsening of the nation's trade balance looms this year, Commerce Secretary William Daley is warning. He told business executives this week to expect a "substantial widening" of the trade deficit in 1999 and perhaps in 2000.
"The basic dynamic behind (the 1998) data (is) the strength of our economy and the weakness of many of our trading partners," said Under Secretary of Commerce Robert Shapiro.
Meanwhile, the relatively strong U.S. dollar, which makes U.S. exports more expensive and imports cheaper, is likely to keep escalating the U.S. trade deficit, said Allan Mendelowitz, a vice president of the Economic Strategy Institute.
The deficit with Asia "remains the matter of greatest concern," Mr. Shapiro said, singling out China and Japan.
China, U.S. Trade Representative Charlene Barshefsky said Wednesday, cannot expect to keep increasing its exports to the United States unless it opens its market wider to U.S. and other foreign goods. China's expanding trade surplus with the United States is not politically sustainable, she cautioned.
The Commerce Department trade report included some modestly encouraging data, however. For the third successive month, the U.S. merchandise trade deficit with Pacific Rim countries declined. But at $14.3 billion, the deficit was still up $4 billion from a year earlier.
Helping narrow the Pacific Rim trade balance was a pickup in U.S. exports to South Korea, one of the countries hardest hit by the Asian financial crisis. The South Korean economy is improving, Mr. Shapiro said. He also said there is evidence that some other South East Asian economies are starting to stabilize.
About $40 billion of the $47 billion increase in the U.S. trade deficit in the January-November period was in trade with Pacific Rim countries.
In another development, Commerce reported that U.S. steel imports in November fell about 6% from October to $1.47 billion. Imports from Japan, by far the biggest supplier, were down 13% from October to $306 million.
But unless there is a further substantial decline in Japanese steel deliveries in December, Ms. Barshefsky warned, the Clinton administration will move to limit those imports. The December data, she said, will be available by the end of next week.
Meanwhile, the Commerce Department announced that starting next week it will make public monthly steel import data much more quickly than in the past, to help analyze the impact of steel import surges.
It is due next month to make a preliminary ruling on calls by U.S. steel producers for antidumping duties on Japanese, Russian and Brazilian steel.
Pacing November imports were shipments of motor vehicles and parts, semiconductors, computer accessories and telecommunications equipment. Overall, imports of automotive products, capital and consumer goods scored new monthly highs, while imports of industrial supplies declined, Commerce said.
Total goods and services imports rose to $94.1 billion, up more than $300 million from October, putting imports in January-November past the $1 trillion mark, about 5% more than a year earlier.
Goods and services exports in November, totaling $78.6 billion, were down by $1.5 billion from October. The largest drops came in civilian aircraft, pharmaceuticals, computer accessories, soybeans and nonmonetary gold.
The export decline was broad-based, as shipments of agricultural products, industrial supplies, capital and consumer goods were all down from October. Partly offsetting those losses was a pickup in automotive exports.
Through the first 11 months of last year, goods and services exports totaled $853 billion, off about $4 billion from a year earlier, Commerce reported
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