Trade deficit soars on oil prices, Chinese imports

The soaring deficit with China and high oil prices bumped the U.S. trade deficit for July to $62.2 billion, nearly $3.5 billion more than the deficit for June.

Data released by the U.S. Department of Commerce showed the U.S. trade deficit with China grew to $24.9 billion for the month of July.

{mosads}Peter Morici, a professor at the University of Maryland School of Business, noted the trade deficit with China in December 2001 stood at only $5.5 billion.

The news prompted criticism from groups that have called for the administration and Congress to take a tougher stand against Chinese trade policies, including a Chinese currency that they say is kept artificially low to prop up exports.

“Some may take solace in export growth last month, but the real story is China’s continuing, lopsided trade relationship with the U.S.,” said Scott Paul, executive director of the Alliance for American Manufacturing, a group closely connected to the steel industry and the United Steelworkers.

In a release, Paul said the $24.9 billion deficit with China is the second highest on record, and charged that the trade gap cost the U.S. 366,000 jobs in 2007.

Exports from U.S. companies did grow in July, although not enough to offset rising imports. The Bush administration has argued the increased exports illustrate the need for the U.S. to approve trade agreements it has negotiated with Colombia and other countries in order to further help exporting U.S. manufacturers. The trade agreements would lower tariffs to U.S. products in free-trade partners.

The trade deficit with OPEC members rose $6 billion from June to July, when they reached $24.2 billion. Those figures could come into play during the congressional debate over offshore drilling, as proponents argue allowing companies to drill off the U.S. coast would reduce dependency on foreign sources of oil.