America's trade deficit with the rest of the
world shot up to an all-time high of $369.7 billion last year. In a
sign of things to come, China overtook perennial front-runner Japan
as the country with the largest trade gap with the United States.
The Commerce Department said the deficit for all of 2000 was
39.5 percent higher than the previous record-holder, a deficit of
$265 billion in 1999. The increase occurred even though the deficit
for December narrowed a slight 0.4 percent to $33 billion, the
third straight monthly decline.
The trade deficit has set an annual record for the past three
years as the strong U.S. economy has been a magnet for imports
while many of America's major export markets have been struggling
to recover from currency crises in 1997 and 1998.
In another report, the Labor Department said consumer prices
shot up 0.6 percent in January, the biggest increase in 10 months,
reflecting a record surge in natural gas prices.
The January increase, which followed three straight monthly
gains of a moderate 0.2 percent, was double what private economists
had been expecting.
The acceleration in price pressures last month reflected a 3.9
percent jump in energy prices, the worst showing since September.
Natural gas prices rose 17.4 percent from last month — the largest
one-month increase on record. Electricity prices were up 2.6
percent from last month, the biggest one-month gain since February
1980.
Outside the volatile food and energy categories, the "core"
rate of inflation was up 0.3 percent in January, the largest
increase since November.
The 0.6 percent rise in the overall Consumer Price Index
followed an even bigger 1.1 percent surge in wholesale prices last
month, the biggest jump in more than a decade.
Critics of U.S. trade policy see the rising trade deficits as a
major flaw in free trade that has allowed low-wage countries to
displace American manufacturing workers.
But free-trade supporters, including top economic officials in
the Bush administration, contend that America has no option but to
compete in the global economy.
That was also the position taken by the previous Clinton
administration, which angered its labor constituency by resisting
protectionist pressures at home while pursuing a strategy of
tearing down foreign trade barriers.
American exports, propelled by strong demand for farm products,
autos and industrial materials, rose by 11.7 percent to top the $1
trillion mark for the first time at $1.07 trillion. But imports
were up an even sharper 17.8 percent to $1.44 trillion, driven in
part by a rising foreign oil bill.
The country imported a record 3.4 billion barrels of crude oil
with the average price rising to $26.41, the highest level in 16
years, since a $27.68 average in 1984.
Among individual trading partners, America suffered the biggest
shortfall with China, a record imbalance of $83.8 billion, 22
percent higher than in 1999.
The deficit with Japan, which for decades has been the
front-runner, also set a record at $81.3 billion, an increase of
10.8 percent over the 1999 imbalance.
America's deficit with its biggest trading partner, Canada,
climbed to a record $50.4 billion while the trade gap with Mexico,
the other partner in NAFTA, rose to a record $24.2 billion. The
deficit with Western Europe hit a record $59.8 billion.
For December, the $33 billion deficit compared to $33.1 billion
in November and $33.6 billion in October, all down from the
all-time monthly high of $33.8 billion set in September. It marked
the first time the trade deficit has improved for three straight
months since mid-1995.
