America set record deficits with China, Japan, Western Europe and Canada.
Trade continues to be the one blot on an otherwise sterling U.S. economic performance.
While the huge deficits have yet to have much impact on the overall economy, analysts are growing concerned that the deficits could become a problem if foreigners, who up until now have been happy to accept U.S. dollars in payment for their products, suddenly grew concerned. If they began cashing in their dollar-denominated investments on Wall Street, that could send the dollar and stock and bond markets crashing. The International Monetary Fund in a new economic forecast on Tuesday cited America's rising trade deficit as one of the primary risks facing the global economy. The new report on trade came a day after President Bill Clinton scored one of his biggest trade triumphs in Congress, passage of legislation wiping away 20 years of annual reviews of China's trade privileges with the United States, granting the country permanent normal trade relations. The legislation was needed so that American exporters could take advantage of significantly lower tariffs China has offered in return for acceptance of its membership application in the World Trade Organization.