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Economists predict the trade deficit this year will widen from last year's $560 billion imbalance. A key reason is they expect U.S. companies to sell fewer goods in Europe, which represents about 20 percent of America's export market. "While the U.S. economy is picking up steam, the rest of the world is not. So, we are importing a lot more," said Joel Naroff, chief economist for Naroff Economic Advisors. U.S. consumers drove the deficit higher buying more foreign cars. Imports of autos and auto parts rose 10.4 percent to an all-time high of $25.3 billion. Imports of capital goods, such as computers and industrial machinery, also hit a record at $44.7 billion. And imports of food products hit a record high of $9.6 billion. Demand for foreign-produced fish, meat, bakery products and wine and beer all rose. The increase in exports reflected records in several categories. Exports of U.S.-made cars and auto parts increased to record $12.7 billion. Exports of U.S.-made capital goods climbed to a record $43.2 billion.
The deficit with China is also growing. In January, it jumped 12.5 percent to $26 billion. Last year, the deficit with China hit a record $295.5 billion, the highest deficit ever recorded with a single country. With millions of Americans unemployed, political pressure is growing in the U.S. to impose economic sanctions on China. Critics say China has undervalued its currency against the dollar. That has made Chinese goods cheaper in the U.S. and American products more expensive in China.
[Associated
Press;
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