Trade Gap Increases on Rising Oil Prices

Washington, DC, July 12, 2007—Rising oil prices outstripped record exports, causing the trade gap to increase in May, according to the U.S. Commerce Department.

The deficit during the month equaled $60.4 billion, up from the $58.7 billion gap in April. Economists surveyed had forecast the deficit at $60 billion.

Much of the rising deficit was due to oil prices, as the average price of a barrel of imported oil rose 3.6 percent to $59.36. But even the part of the gap not attributed to oil rose by 1 percent in the month.

Exports rose 2 percent in the month to a record $130.1 billion, while overall imports also rose 2 percent to $190.5 billion.

Nearly a third of the gap was due to the trade imbalance with China. The gap between goods imported from and exported to China rose to a record $20 billion in the month, up 3 percent from the gap in April and up 12 percent from a year earlier.

The trade gap with China has been getting increased attention in recent months, not only because of the impact on U.S. manufacturers competing with Chinese goods, but also because of questions about the safety of a range of Chinese imports, ranging from toys to seafood, toothpaste and animal feed.

The Chinese government recently announced that nearly 20 percent of all food and consumer goods it examined in a survey were substandard or tainted.