America’s trade deficit surged to a monthly record $11.37 billion as Japanese cars flooded the U.S. market ahead of possible punitive tariffs.
The Clinton administration said the sharp trade deterioration only stiffened its resolve to impose record sanctions against Japan next week if no deal is reached in the meantime to boost purchases of American-made cars and parts.
“It is critical that we have a meaningful and concrete solution,” U.S. Trade Representative Mickey Kantor told reporters as negotiators prepared to go back to the bargaining table today in Geneva. “Japan is the second-largest economy in the world. They have a responsibility to open their markets.”
The Commerce Department report showed that the U.S. deficit in goods and services hit an all-time high in April, up 16.2 percent from a revised March deficit of $9.79 billion.
The deterioration reflected a $738 million rise in imports, which set a record, and an $882 million drop in exports.
Half the import surge came in autos and auto parts, led by a $210 million increase in imports from Japan, which climbed 9.5 percent to $2.4 billion, the second highest monthly total on record.
Analysts said it appeared that Japanese car companies had been rushing to get shipments into the country in advance of any possible trade retaliation. The administration did not target the Japanese luxury cars until May 16, but there had been rumblings of possible auto sanctions for several months before the formal announcement.
While Tokyo newspapers have been full of stories in recent days suggesting that Japanese automakers were offering to compromise in order to escape trade sanctions, Kantor would make no prediction on the outcome of the dispute.
The administration is threatening to effectively ban Japanese luxury cars from the American market by imposing 100 percent tariffs on 13 models, including such popular lines as Toyota’s Lexus and Honda’s Acura.
The surprising jump in April’s deficit was the largest imbalance since the government began tracking goods and services on a monthly basis in 1992. It was likely to push overall economic growth, as measured by the gross domestic product, close to zero for the current spring quarter, economists said.
In addition to the monthly report, the government also released Wednesday the first-quarter report on the broadest measure of trade, the current account. For the January-March period this deficit totaled $40.5 billion, the sixth-worst showing on record.
The current account measures trade in goods and services like the monthly report, and it also tracks investment flows and foreign aid.