US Trade Gap Reaches Record Proportions

The US’s total trade deficit reached a record $617.7 billion, Tire Review reports, citing the Commerce Department. In 2004 the gap widened by 24.4 per cent compare with the previous year, thanks to increased costs of crude oil and more purchases of finished goods. According to the report, purchases of cars and tyres reached all-time highs. The trade deficit even reached as far as farm products, with Americans buying more cheese, wine and food products that the US exported.

The 2003 trade deficit was, at the time, a record $496.5 billion, according to the Commerce Department. China was the U.S.’s largest deficit trade partner in 2004, with an imbalance of a record $162 billion, an increase of 30.5 per cent over 2003. US trade also suffered large increases in the deficits with Japan ($75.2 billion), Canada ($65.8 billion, and the European Union ($110 billion).

An Associated Press report on the deficit said the Bush Administration argues that the huge deficits show that the US economy is growing faster than those in the rest of the world. However, economists are concerned that the huge deficit “has reached such stratospheric levels that foreigners may decide they do not want to hold as much in dollar-denominated assets.”

US exports of goods and services in 2004 jumped 12.3 per cent over 2003 to $1.15 trillion, but imported goods and services were valued at a record $1.76 trillion, an increase of 16.3 per cent over the year prior, said the Commerce Department. Leading the way were imports of foreign crude oil, up 35.7 per cent to $180.7 billion. The fact that the dollar was 15 per cent weaker than major foreign currencies over the last three years meant US exports also hit an all-time high, the department said.