The U.S. trade deficit soared to a record $13 billion in March with imports of autos, consumer goods and foreign food all climbing to the highest levels in history.
America's trade gaps with Japan, China and other Asian countries widened dramatically as the Asian crisis crashed onto America's shores, underscoring the political problem facing the Clinton administration.In a speech to the World Trade Organization on Monday, President Clinton challenged other countries to fight the forces of protectionism by redoubling their efforts to open markets through new global trade talks.
But the president has been stymied in his own efforts to win the trade negotiating authority he will need for those negotiations by a Congress made nervous by the soaring U.S. deficit.
The Commerce Department report today showed that the March deficit in goods and services was up 7 percent from a $12.2 billion imbalance in February, marking the fourth straight monthly increase.
So far this year, the deficit is running at an annual rate of $147 billion, far ahead of last year's $113 billion trade gap. The soaring deficit is expected to represent the chief impact on the U.S. economy from the financial meltdown of several Asian economies last year.
The steep plunge in currency values in Indonesia, South Korea and Thailand has produced steep recessions in those countries, and in the case of Indonesia growing political turmoil. The lost Asian markets will dampen U.S. exports to the region while the weaker currencies will make Asian products cheaper for American consumers.
Because of the uncertainty over Asia, Federal Reserve policymakers on Tuesday held off from raising U.S. interest rates, not wanting to roil financial markets at a time when they are already on edge wondering what the outcome will be of violent rioting against the 32-year rule of Indonesian President Suharto.
For March, America's deficit with Japan jumped 8.8 percent to $5.8 billion, the worst showing in five months as imports of machinery and telecommunications products jumped. Last Friday, Clinton praised Japanese Prime Minister Ryutaro Hashimoto for putting forward a credible $125 billion package of tax cuts and increased government spending to boost the moribund Japanese economy.
But U.S. officials continue to stress that Japan must move on the package quickly as well as deal with its shaky banking system in order to serve as an "engine of growth" for smaller troubled Asian nations.
The $13 billion March deficit was the largest imbalance since the government starting keeping track of merchandise and services trade on a monthly basis in 1992.