U.S. auto imports hit all-time high

Washington — U.S. auto imports hit a new all-time high in the first half of the year — as auto production is surging in lower wage countries such as Mexico and a strong dollar is hindering American exports.

The overall U.S. trade deficit rose 7.1 percent — adjusted for seasonal fluctuations — to $43.8 billion in June. Autos, which includes vehicles, parts and engines, accounted for more than one-third of the trade deficit as U.S. auto imports rose to $29.8 billion, the U.S. Census Bureau reported Wednesday.

U.S. exports of autos are down $3 billion in the first half of 2015 to $74.8 billion. Auto exports were flat in June at $12.6 billion — up just $62 million.

By contrast, U.S. imports of autos rose by $10.8 billion to $171.5 billion in the first six months of the year.

The U.S. exported $1.4 billion in cars to Mexico in the first half of the year — and the United States imported $11.3 billion in cars; U.S. truck and other larger vehicles to Mexico were $630 million, while Mexico sent the U.S. $14.5 billion in truck and other vehicle exports. The total automotive trade deficit with Mexico — including parts, engines and other vehicles — was $35 billion in the first half of the year.

Global automakers are dramatically boosting production and building new plants in Mexico, which is now the seventh largest auto producer and fourth largest auto exporter in the world.

The U.S. sent Japan about $1 billion in total auto exports in the first half of the year, while Japan sent the United States $25 billion in cars, trucks and parts.

Both nations are fighting in the ongoing free trade talks over rules that would make each country more attractive for production.

The U.S. auto trade deficit is soaring. In May, the United States imported $29.4 billion in autos — nearly as much as July. In the first half of the year, the U.S. imported $171.5 billion in autos — up $10.8 billion.

Auto imports have been rising steadily. Americans bought $254 billion in imported automobiles in 2011, $298 billion in 2012, $309 billion in 2013 and $328 billion last year. The auto trade deficit is also rising — it was $156 billion in 2013 and $169 billion last year.

IHS economist Patrick Newport said the strong dollar and other factors are hurting U.S. exports.

“Going forward, for the next two years, we expect net exports to be a drag on growth as domestic growth and a strong dollar bring in more imports and the strong dollar discourages exports,” he said.

A strong U.S. dollar makes American exports more expensive in local currency terms and makes exports to the United States cheaper in dollar terms.

Matt Blunt, president of the American Automotive Policy Council that represents Detroit’s Big Three, noted that “U.S. automotive exports represent the largest export sector with over $140 billion in exports last year and the industry is a leading indicator of U.S. export trends.”

Blunt said “automotive exports have slowed despite growing global auto markets. Important factors influencing this recent trend include a stronger dollar, foreign currency manipulation and non-tariff barriers faced by our automakers in overseas markets.”

Automakers have unsuccessfully tried to convince the Obama administration to take a harder line on currency manipulation.

DShepardson@detroitnews.com