The largest U.S. trade deficit since October 2008 was racked up in June, touching off new demands that Congress “step up to the plate and crack down on unfair trade practices.”

Although agriculture continued to maintain a positive trade balance of some $1.60 billion in June, the Commerce Department’s overall trade report reflected a dismal $53.1 billion deficit. Overall exports fell to $1.709 billion, the largest drop in more than two years.

The U.S. trade deficit through June pointed to an annualized $576.6 billion, more than 15 percent higher than 2010. The large increase took analysts by surprise; most had been looking for an improvement in the deficit.

China was the key factor in the huge imbalance; the June U.S. deficit with that country was up 6.8 percent to $26.7 billion, the largest since September 2010. Other large deficits were with the European Union, $9.8 billion, a12.2 percent increase, and Japan, $4 billion, a 53 percent increase (imports from Japan had dropped sharply following the earthquake and tsunami in March that interrupted production and shipments; the June figures reflected a return to more normal trade).

The increasingly lopsided U.S. trade deficit with China has generated considerable pressure on Congress to take measures to counteract charges that China manipulates its currency, giving it an unfair cost advantage over U.S. exports.

Last fall, the House passed by a large majority (348-79) a measure aimed at dealing with currency manipulation. A similar measure, the Currency Reform for Fair Trade Act of 2011, has been introduced in the Senate.

“The U.S. trade deficit with China has cost the U.S. more than 2.4 million jobs since 2001,” says Scott Paul, executive director of the trade group Alliance for American Manufacturing. “We support immediate passage of this legislation, which would allow for undervalued currency to be treated as an actionable subsidy under U.S. trade law.”

Passing legislation to “hold China accountable for its currency manipulation is one of the few bipartisan things Congress could do to lower our trade deficit, create manufacturing jobs, boost economic growth, and cut spending all at the same time,” Paul says.

“A rising trade deficit is not the prescription for job creation in America. The June trade deficit … is further proof that our economy is falling behind … Unless the Obama administration gets tougher with China, we’ll continue to see high trade deficits and anemic job growth.”

Not surprisingly, China trade groups oppose the legislation, calling it “a huge gamble at a very fragile time for America’s economy” and contending it would “do more harm than good,” particularly if it resulted in retaliation by U.S. trading partners.

An example cited was the U.S.’ imposition of a 35 percent tariff on tire imports from China, which then resulted in China levying tariffs of 100 percent or more on U.S. chicken.