Higher prices for imported goods give trade deficit a large jolt. ECONOMIC BAD NEWS

The United States trade deficit refuses to go away for the holidays. Instead, it is now clear, Americans will be gift wrapping presents made by foreign hands. Evidence of this imported Christmas came yesterday when the government reported that the trade deficit swelled to $17.6 billion in October, a 25 percent increase over September.

This large increase was a surprise to economists and administration officials who were hoping the falling dollar would help turn the trade gap around. Instead, complained Mickey Levy, an economist with Fidelity Bank in Philadelphia, ``This is a distinctly lousy number.''

United States Trade Representative Clayton Yeutter termed the figures ``very disappointing.''

Even though the trade numbers were worse than expected, the stock market did not collapse as it did in October after similiar bad news. The Dow Jones industrial average closed down 47.08 points to 1,855.44, according to preliminary figures.

But the dollar declined sharply against the yen, falling to 129.85 yen before recovering some ground. The dollar also posted record lows against the West German mark.

In Washington, House Speaker Jim Wright (D) of Texas said he thought the dropping dollar was ``counterproductive'' to the trade deficit. He said the administration should reexamine its policy.

The Treasury Department, through a spokesman, said it continues to stand by the Louvre accord, a February agreement to stabilize the value of the US dollar.

There is some evidence that this is in fact happening. In an interview yesterday, Mr. Yeutter blamed the large trade deficit on both the tenacity of foreign companies to keep market share and the downward ``ratcheting'' of the dollar. ``Hopefully about now we'll see a leveling off in the dollar,'' Yeutter says, adding a further decline, ``will make the trade deficit worse.''

Stabilizing the dollar, however, is a difficult problem. ``Who is going to buy it?'' asks Charles Taylor, an international economist with Prudential-Bache Securities in Washington. ``The government has just not lucked out with these numbers.''

The trade numbers for October showed across-the-board increases in imports, which jumped 12.3 percent to a record $39.4 billion.

The largest increase was in imported autos, which rose 37 percent to $4.5 billion. Economists quickly pointed out that this was reflecting higher prices for German and Japanese cars following declines in the dollar. Oil imports also rose by 10.4 percent, reflecting the slightly higher cost of crude oil.

As in past months, US exports continued to rise, gaining 3.7 percent over September.

Economists note that the trade numbers are distorted by the falling dollar. Higher import prices have swamped any gain in lowering the volume of imports. On a volume basis, US exports are up about 20 percent while imports are down.

The bad trade numbers immediately provoked calls from Congress for President Reagan to focus on the trade issue. Sen. Lloyd Bentsen (D) of Texas, head of the Senate Finance Committee, said, ``It is time for the President to negotiate with Congress on trade as earnestly as he negotiated the INF treaty.''

Speaker Wright predicted that trade legislation would pass Congress in February. The Omnibus Trade Bill is now in conference to iron out differences between the House and Senate versions.

Economists think the administration should get some help when the November trade numbers are reported next month.

This may be happening. In Tokyo, the Ministry of Finance reported Japan's unadjusted trade surplus in November declined 36 percent from the $7.4 billion reported last November, to $4.74 billion. Japan's surplus with the US dropped by 14 percent, to $4.2 billion.

Even so, it is likely the trade imbalance with Japan will be a major topic of discussion when Japan's new prime minister, Noboru Takeshita, meets with President Reagan in Washington Jan. 13.

Mr. Takeshita is also likely to hear from Trade Representative Yeutter, who is convinced the trade deficit remains sticky because Japanese companies are clinging to their market shares. ``Our economists have done an analysis which indicates foreign companies, especially those from Japan, have protected market share much more aggressively than those from other countries.'' Yeutter believes this attitude ``cannot continue forever, assuming their earnings are pinched by the exchange rate movements.'' He concedes that foreign companies have been improving their productivity but adds, ``Even that has its restraints.''

Many economists, however, do not believe the trade deficit numbers will improve until the US further reduces its budget deficit or increases its savings rate. Currently, the US counts on foreigners to finance its budget deficit. If if did not get foreign savings, interest rates would be higher in the US. In order to buy US government bonds, however foreigners must sell the US merchandise. Thus, the circle continues.

The administration would like to see foreigners stimulate their economies and make them grow at a faster rate than that of the US. If that were to happen, Yeutter reasons, the global economy could continue to grow without a recession.

Tetsuo Jimbo in Tokyo contributed to this report.