Trade Gap Giving Clinton Fits

WASHINGTON: It may be time for the world to start saving itself for a change. The U.S. trade deficit hit an all-time high of $168.6 billion in 1998 as American manufacturers continued to be overrun by cheap imports from crisis-ridden economies in Asian and Latin America. TIME senior economics reporter Bernard Baumohl says the yawning deficit hasn't hurt the U.S. economy too badly yet -- but it's becoming a very prickly pear for President Clinton. "We can't continue to be the only customer in town," he says. "It's stirring up a lot of protectionist sentiment, even as Clinton keeps pushing for freer trade."

Manufacturing jobs are already being lost at home, and all those dollars with which the U.S. buys imports are flooding the world markets -- raising the prospect of both an economic slowdown and a weak currency down the road. That's not what Clinton had in mind for his final year in office. "This is going to be a key topic at the G7 meeting this weekend in Europe," says Baumohl. "Japan and Europe have to get their trade barriers down and their economies back in importing trim, at least until Asia and Latin America recover. And the only thing the U.S. can really do is keep hammering the point home." Or start slapping tariffs on imports -- something this free-trade, economic-boom president would much rather not do.