US trade gap widens 7% in June as im­ports jump


The U.S. trade deficit in­creased in June as solid con­sumer spend­ing pulled in more im­ports, while the strong dol­lar re­strained ex­ports.

The Com­merce Depart­ment said Wed­nes­day the trade gap jumped 7 per­cent to US$43.8 bil­lion in June, up from US$40.9 bil­lion in May. Im­ports in­creased 1.2 per­cent to US$232.4 bil­lion, while ex­ports edged lower to US$188.6 bil­lion from US$188.7 bil­lion.

U.S. man­u­fac­tur­ers have been held back this year by the strong dol­lar, which makes their prod­ucts more ex­pen­sive over­seas.

Ex­ports of large cap­i­tal equip­ment, in­clud­ing telecom­mu­ni­ca­tions gear and in­dus­trial ma- chin­ery, fell 1.7 per­cent in June. Im­ports of food, auto parts, and con­sumer goods such as phar­ma­ceu­ti­cals and cell­phones surged as Amer­i­cans spent more.

Even so, the deficit nar­rowed in the sec­ond quar­ter com­pared with the first, boost­ing the econ­omy.

Trade has been volatile this year. La­bor dis­putes at West Coast ports in the first quar­ter de­layed im­ports and the ship­ment of U.S. goods over­seas. That low­ered ex­ports and pushed the deficit to a three-year high in March of US$50.6 bil­lion.

In­ter­na­tional trade sub­tracted about 2 per­cent­age points from growth in the Jan­uary- March quar­ter when the econ­omy barely grew, ex­pand­ing at an an­nual rate of just 0.6 per­cent. It then boosted growth 0.1 per­cent­age point in the April-June quar­ter, when growth picked up to a 2.3 per­cent pace.

The dol­lar has risen about 14 per­cent in value against over­seas cur­ren­cies in the past year. That also makes for­eign prod­ucts cheaper in the U.S.

More con­sumer spend­ing may also be push­ing up im­ports. Steady hir­ing has given nearly 3 mil­lion more Amer­i­cans pay­checks in the past year, boost­ing their pur­chas­ing power. Con­sumer spend­ing in­creased 2.9 per­cent up in the April-June quar­ter af­ter ris­ing only 1.8 per­cent in the first three months of the year.

Sep­a­rately, Pres­i­dent Barack Obama says a trade deal in the works with 11 other Pa­cific Rim na­tions will open more mar­kets for U.S. goods and boost the U.S. econ­omy.

Yet trade of­fi­cials were un­able to reach a fi­nal agree­ment on the Trans- Pa­cific Part­ner­ship last week, partly be­cause of dif­fer­ences over the treat­ment of dairy goods. An agree­ment could be reached at fu­ture meet­ings, of­fi­cials said.

Obama won a hard-fought bat­tle in Congress in June to se­cure fast-track ne­go­ti­at­ing au­thor­ity, which al­lows him to sub­mit trade agree­ments to Congress for an upor-down vote.

Crit­ics of the agree­ment say that it will cost the U.S. man­u­fac­tur­ing jobs and does not ap­pear to hold coun­tries ac­count­able if they weaken their cur­ren­cies to gain an un­fair trade ad­van­tage.

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