Trade Deficit Set High in 1983 Of $69.39 Billion --- Baldrige Sees Wider 1984 Gap Despite the Improvement Posted for Last Month
WASHINGTON -- The deteriorating U.S. trade balance, which showed a record deficit of $69.39 billion in 1983, represents a problem for every industry that exports its products or faces heavy competition from imports.</br></br>December's merchandise trade deficit, the Commerce Department said, narrowed to $6.3 billion from November's $7.4 billion, largely because of a decline in oil imports. But Commerce Secretary Malcolm Baldrige said he expected the 1984 deficit to widen further, with imports exceeding exports by perhaps $100 billion.</br></br>The effect of these trade woes has been widespread, even extending to industries where the U.S. traditionally has had an edge over foreign competitors -- such as telecommunications and machinery. David Ernst, vice president of Evans Economics here, says the deficit cost the U.S. 1.5 million jobs in 1983.</br></br>The main reason the deficit is so large, most economists agree, is the high value of the dollar, which has risen some 30% against other major currencies since 1980. That makes U.S. exports more expensive overseas and foreign goods cheaper in the U.S. As a result, "American firms have a 30% cost disadvantage in world markets," complains Jack Albertine, who heads a trade association of medium-size, fast-growth companies called the American Business Conference.</br></br>The dollar's high value results primarily from high inflation-adjusted interest rates, which attract foreign savings to this country, according to the conventional analysis. High interest rates, in turn, are caused partly by the government's mammoth budget deficits.