WASHINGTON (AP) — The trade deficit widened in December as rising oil prices pushed the value of imports up faster than U.S. exports.
The deficit increased 5.9 percent in December to $40.6 billion, the Commerce Department reported Friday.
U.S. exports of goods and services rose to $163 billion, a 1.8 percent gain and the best showing since July 2008. Sales of industrial machinery, civilian aircraft and autos and auto parts led U.S. exports.
But imports rose even faster. A 2.6 percent gain pushed total U.S. imports to $203.5 billion, the highest level since October 2008. The increase was led by a 16.8 percent rise in imported oil. The average price for a barrel of imported crude oil climbed to $79.78 in December, the highest point since crude imports averaged $91.73 per barrel in October 2008.
For all of 2010, the U.S. trade deficit rose to $497.8 billion, a 32.8 percent surge. It was the biggest annual percentage gain since 2000. In 2009, the deficit had fallen to the lowest point in eight years as demand for imports plunged.
Economists believe the deficit will keep widening in 2011 but that U.S. manufacturers will benefit from a weaker dollar, which makes their goods more competitive in foreign markets.
“Exports remain strong and are a bright spot in the U.S. expansion,” said Cary Leahey, an economist at Decision Economics. But economists predicted the overall deficit will widen further in coming months, reflecting rising global oil prices.
President Obama, looking for ways to attack high unemployment, has set a goal of doubling the nation’s exports in five years. He recently pledged to move forward this year to win approval of a free trade pact with South Korea.
New trade deals remain a sensitive political issue. Labor unions charge that previous pacts failed to protect American workers from unfair foreign competition and have cost millions of American jobs. Much of the criticism is focused on China, which critics allege is manipulating its currency to gain unfair trade advantages and erecting barriers to keep U.S. products out.
For 2010, the deficit with China rose by 20.4 percent to hit an all-time high of $273.1 billion, the largest imbalance the United States has ever recorded with a single country. The United States has had its biggest trade deficit with China since 2000 when that country surpassed Japan.
The expectation is that trade tensions between the two largest economies will only intensify in coming years.
For 2010, U.S. exports to China climbed to 32.2 percent to an all-time high of $91.9 billion. However, Chinese imports to the United States also rose to a record high of $364.9 billion, an increase of 23.1 percent. The trade deficit is the difference between exports and imports.