WASHINGTON – The U.S. trade deficit hit a record $68 billion in July as surging global oil prices pushed America's foreign oil bill to the highest level in history.
The Commerce Department reported Tuesday that the July deficit jumped 5 percent from the June imbalance. Analysts had expected the deficit to worsen slightly, but the overall imbalance was worse than expected and surpassed the old monthly record of $66.6 billion set last October.
So far this year, the deficit is running at an annual rate of $776 billion, putting the country on course to rack up a record annual deficit for the fifth straight year. Democrats, campaigning for control of Congress in the November elections, hope voters will view the soaring trade deficits as evidence that President Bush's trade policies are not working.
For July, U.S. exports, after setting a string of records, edged down 1.1 percent to $120 billion — still the second highest level in history. Sales of American jetliners, computers and food products all slipped.
Imports rose to a record high of $188 billion, an increase of 1 percent from the June level. America's foreign oil bill climbed 4.8 percent to an all-time high of $28.5 billion, reflecting record oil prices in July.
The politically sensitive deficit with China did decline slightly in July to $19.6 billion but is still on track to far exceed last year's $202 billion deficit, the highest ever recorded with a single country.
Treasury Secretary Henry Paulson will leave later this week for an Asian trip that will take him to China for his first meetings with Chinese economic officials since he joined the Bush's Cabinet in July.
The administration is pushing China to move more quickly to allow its currency to rise in value against the dollar as a way to narrow the yawning trade gap by making American exports cheaper in China and Chinese goods more expensive for U.S. consumers.