The dollars 12.1bn deficit follows an dollars 8.37bn shortfall in May. The dramatic deterioration, far more acute than economists had predicted, was attributed primarily to the recession in most parts of Europe that continues to dent American exports. At the same time, American imports from Japan have continued to surge.
The Commerce Department reported a 3.3 per cent drop in exports during June to dollars 37.6bn and a 5.1 per cent jump in imports to a record dollars 49.7bn.
The deficit with Japan alone leapt by 15.5 per cent, with increased imports of clothing, semiconductors and electronics.
The deficit has been fuelled in part by a slow but steady recovery in the US. However, a collapse in exports is certain in the longer term to slow down future recovery prospects.
Already, the government is predicting a second-quarter economic growth rate of only 1.6 per cent.
A bright spot for American exports is Mexico and the Latin American countries. President Bill Clinton has promised even better sales to the region after implementation of the North American Free Trade Agreement. Yesterday he named William Daley, brother of Chicago's mayor, Richard Daley, as his Nafta spokesman to help overcome opposition to it in Congress.
After a period of contraction during 1990-91, America's annual trade deficit has returned to a widening trend. It reached dollars 84.5bn last year and is expected to touch dollars 110bn in 1993.
Last month, President Clinton struck a deal with Tokyo to begin a process of opening Japanese markets to US goods. The administration remains hopeful that the agreement, combined in the short term with a strengthening yen, will help to push down the defict with Japan.Reuse content