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U.S. Trade Gap Hits Record $16.8 Billion

October 21, 1998|From Times Wire Services

WASHINGTON — America's trade deficit hit an all-time high of $16.8 billion in August as exports of goods and farm products fell to a 1 1/2-year low and imports surged, a combination that's hurting manufacturers and providing a flood of low-cost goods for consumers.

The deficit hit a record high after widening in July to a revised $14.5 billion, the Commerce Department said Tuesday. At the current pace, the shortfall for 1998 is on track to set a record of $165 billion, easily topping the previous record of $153.3 billion set in 1987, the previous record year.

Much of the deterioration reflected an increase in automotive imports, particularly from Mexico and Canada, as foreign suppliers played catch-up after the settlement of General Motors Corp. strikes.

Exports fell 0.3% in August to $74.8 billion--the lowest level since January 1997 and the fifth straight monthly decline--as orders slumped for aircraft and industrial hardware. Imports jumped 2.2% to $91.6 billion.

The deficit with China climbed to a record $5.9 billion, reflecting a surge in imports of toys and games as stores stock up for Christmas. The gap with Japan was up 0.5% to $5.2 billion, 16% higher than a year ago.

August's deficit was the widest since the government began tracking trade in both goods and services in January 1992. The previous high was $15.7 billion in May 1998.

At the White House, spokesman Joe Lockhart said the trade figures underscore the need for other countries to heed President Clinton's call for a "strategy to restore economic growth around the world."

The administration has been working behind the scenes to assemble a $30-billion financial assistance package for Brazil, hoping to erect a firewall that will keep Latin America's largest economy from going into a crash like those of Asia and Russia.

Indeed, on Tuesday, Brazil announced that it had reached agreement with the International Monetary Fund on budget surplus targets for the next three years, which could pave the way for the release of aid.

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