- The Washington Times - Wednesday, March 10, 2004


America’s trade deficit reached a record monthly high in January, the start of an election year in which Democrats hope to use the swollen trade gap and the loss of U.S. jobs as campaign issues against President Bush.

The Commerce Department reported yesterday that the trade imbalance mushroomed to $43.1 billion in the first month of 2004, representing a 0.9 percent increase from the previous month.

For all of 2003, the trade deficit posted a record annual high of $489.9 billion, according to revised figures.

The latest snapshot of trade activity comes as tensions have grown over global trade and the migration of jobs from the United States to other countries.

The Bush administration believes the best way to handle the trade deficit is to get other countries to remove trade barriers and open their markets to U.S. businesses. But Democrats and other critics point to the deficits as evidence that the president’s free-trade policies aren’t working and are a factor in the loss of U.S. jobs.

Mr. Bush defended his economic policies, including free trade, yesterday and renewed a warning against economic isolationism — a swipe at presumptive Democratic presidential nominee John Kerry, though Mr. Bush didn’t mention him by name.

Mr. Kerry, a Massachusetts senator, has said he would place all trade deals under a 120-day review and would require companies to provide notice before moving jobs to other countries.

The trade deficit in January grew as the value of imported goods and services eclipsed the value of U.S. exports.

Imports of goods and services came to $132 billion in January, the second-highest level on record. Still, that represented a 0.5 percent dip from the record level of imports seen in December. The economic rebound in the United States has fed demand for foreign-made goods.

Exports, meanwhile, totaled $89 billion in January, representing a 1.2 percent decrease from December. That largely reflected weaker demand for U.S. food products. Exports of meat and poultry in January plunged by 40 percent to $379 million, the lowest level since November 1993, as the first case of mad cow disease in the United States stalled beef exports to many countries.

Sherry Cooper, chief economist at BMO Nesbitt Burns, called the drop in exports disturbing and said the trade deficit probably would be a drag on economic growth in the current quarter.

Federal Reserve Chairman Alan Greenspan last week said that a weaker U.S. dollar should eventually help narrow the country’s trade deficits.

Yesterday’s report also showed that America’s politically sensitive trade deficit with China expanded to $11.5 billion in January, up from $9.9 billion in December.

U.S. manufacturers contend that China is deliberately undervaluing its currency, the yuan, by as much as 40 percent, giving that country a big trade advantage when competing with U.S. companies and contributing to the loss of U.S. jobs.

The Bush administration has been pressing Beijing to stop linking its currency to the dollar and let the value of the yuan be set in open markets.

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