U.S. Presses China Over Trade, Yuan

New data Thursday showed the U.S. trade deficit widened in April as the government stepped up pressure on China to implement changes aimed at narrowing the trade gap.

The Commerce Department said the U.S. deficit in international trade of goods and services increased 0.6% to $40.29 billion from a revised $40.05 billion the month before. Exports fell by $813 million, while higher oil prices helped to drive imports up by $1.61 billion.

The U.S. trade deficit with China expanded to $19.31 billion in April from $16.9 billion in March, adding to a trend that some economists worry could revive the international trade imbalances that many see as a major contributor to the recent financial crisis.

In Washington, U.S. Treasury Secretary Timothy Geithner told senators Thursday that China was taking some steps to address U.S. concerns about its currency and trade policy, but also vowed to press for more fundamental change.

“We are seeing some progress, but we still face many challenges,” Mr. Geithner said in prepared remarks to the Senate Finance Committee. “The distortions caused by China’s exchange rate spread far beyond China’s borders and are an impediment to the global rebalancing we need.”

Mr. Geithner noted that the yuan had appreciated about 9% against the country’s trading partners. Nearly half of that has occurred over the past seven weeks because of the recent slide in the euro.

China controls the trading range of the yuan, but Chinese President Hu Jintao said in U.S.-China meetings last month that his government was committed to reforms that would allow the currency to move more freely.

Trade, one of the few strengths in the U.S. economy during the recent recession, has become a drag on the recovery as imports have outpaced exports. Trade subtracted 0.66 percentage point inflation-adjusted growth in gross domestic product during the first quarter.

The U.S. bill for foreign crude oil rose to $22.69 billion, the highest amount since October 2008. Imports by volume fell, but the average price per barrel climbed $2.81 to $77.13.

Separately on Thursday, the number of U.S. workers filing new claims for unemployment benefits dipped slightly in the first week of June while continuing claims fell to the lowest level in 18 months.