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Last Updated: Tuesday, 12 April, 2005, 17:10 GMT 18:10 UK
US trade deficit hits fresh high
Textile goods
Textile imports from China have soared this year
The US trade deficit has widened to a new high as the world's largest economy consumed record imports of consumer goods and industrial materials.

The US trade gap rose 4.3% to $61bn (32bn) in February, data published on Tuesday showed, well above market forecasts of a $59bn shortfall.

The deficit - up from $58.5bn in January - continues to be swollen by America's appetite for imports.

These rose 1.6% to a record $161.5bn while exports rose 0.1% to $100.5bn.

China effect

Textile imports rose sharply after the abolition of global quotas in January, with shipments from China to the US rising 9.8% in February.

The growth - fuelled by the ending of decades-old restrictions on the level of textile trade between individual countries - will increase pressure on the US government to introduce measures to protect domestic manufacturers.

These figures reflect the lack of competitiveness of US products
Marie-Pierre Ripert, IXIS Corporate and Investment Bank

The US Commerce Department is considering putting temporary curbs on some textile imports from China after US manufacturers expressed concerns about a flood of Chinese goods entering the country.

Although the overall US trade deficit with China fell by 9% in February to $13.9bn, the US government is facing growing calls to rebalance its trading relationship with China.

"You have a situation with China where imports are up by 49.8% from a year ago but at the same time US exports to China barely grew by 1.6%," John Lonski, an economist with Moody's Investors Service, told Agence France Presse (AFP).

"That is not going to sit well with the members of the United States Congress."

Oil prices

The US thirst for imports shows no sign of abating, with a strong economy resulting in record imports of cars, consumer goods and industrial materials in February.

Petroleum imports were the second highest on record, fuelled by a fresh rise in US crude oil prices this year to above $55 a barrel.

US trade gap figures

Economists expect the deficit for 2005 as a whole to top $700bn, significantly higher than 2004's $617bn figure.

"These figures reflect the strength of domestic demand and the lack of competitiveness of US products," Marie-Pierre Ripert, an economist with IXIS Corporate and Investment Bank, told AFP.

Critics of the Bush administration's free trade policies have argued that they have resulted in a sharp drop in US manufacturing jobs.

Some economists have argued that the rising deficit has weakened the US dollar and could affect stock markets if foreign investors decide to sell shares and bonds denominated in dollars.

The US government has argued that the trade gap reflects strong consumer demand within the US.

It is focusing its attention on trying to help key trading partners in Europe and Asia improve their growth rates.




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