Trade Deficit in U.S. Widens to a Record $68 Billion

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The U.S. trade deficit widened more than forecast in July to a record $68 billion as imports reached an all-time high and exports declined for the first time in five months.

The gap in goods and services trade follows June's $64.8 billion shortfall, the Commerce Department said today in Washington. The increase in imports reflected record crude oil prices and more shipments of equipment, raw materials and consumer goods from overseas.

Improvement in the trade deficit may prove difficult as U.S. growth, while slowing, is still outpacing the economies of most of its trading partners. Americans' appetites for Japanese electronics and cheaper clothing made in China may keep the shortfall close to a record in coming months even as energy prices wane and overseas shipments accelerate.

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Some U.S. lawmakers hold China accountable for the swollen trade gap, saying China's currency policies keep the yuan artificially weak, boosting the Asian nation's exports. The trade deficit with China narrowed to $19.6 billion from $19.7 billion in June. It's close to the record $20.5 billion reached in October 2005.

China's trade surplus rose to a record for a fourth straight month in August, the Beijing-based customs bureau said yesterday.

China's ballooning trade surplus is flooding the economy with cash, hampering government efforts to rein in lending and investment.

With the surplus likely to top last year's record $102 billion, Chinese Premier Wen Jiabao may be pressed to let the yuan rise faster to avoid U.S. trade sanctions.

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China will be ``more proactive and progressive'' in allowing the market to set the currency's value, Finance Minister Jin Renqing said Sept. 8. The yuan last week reached its highest against the dollar since China ended its peg to the U.S. currency in July 2005.