Home · Business · Nov 4 archive
US Trade Deficit Narrows in September, But Remains Elevated
Confirmed
In Short: The US trade deficit narrowed slightly in September, contracting by 0.7% to $105 billion, according to the Commerce Department's Bureau of Economic Analysis and Census Bureau.
The US trade deficit narrowed slightly in September, contracting by 0.7% to $105 billion, according to the Commerce Department's Bureau of Economic Analysis and Census Bureau. Economists had forecast the deficit to be around $108 billion, based on data from Reuters.
The October deficit in goods was $59.14 billion, a 24.5% decrease from September, according to the Bureau of Economic Analysis. However, the overall trade deficit for goods and services combined fell by 39%, reaching monthly numbers not seen in at least five years.
Imports increased by 1.2% to a record high of $426.6 billion in September, driven largely by robust domestic demand. This surge in imports has contributed to the widening of the trade deficit to near-record levels.
Despite President Donald Trump's aggressive tariffs, the US logged record goods trade deficits with several countries, including Mexico, Vietnam, Taiwan, and South Korea. The massive imports of goods to support the AI build-out have been a key factor behind the widening trade deficit.
James Knightley, chief international economist at ING, observed that less than two years ago, the US was importing around $20 billion per month of these products. In September, the trade deficit for computers, peripherals, and semiconductors alone was $87 billion, indicating that much of the value added is coming from overseas.
The Coalition For A Prosperous America emphasized that tariffs are affecting trade flows, but the data remain distorted by front-loading and policy uncertainty. The post-IEEPA decline in the goods deficit is real, but it is layered on top of an early-year import surge that virtually guarantees another trillion-dollar goods gap.
What this adds
The Coalition For A Prosperous America highlighted the need for sustained investment in domestic productive capacity to rebalance trade, rather than relying solely on tariffs or lower interest rates.
The report also noted that record low trade deficits with China could be attributed to decoupling or derisking efforts, but warned that any progress could evaporate if the Supreme Court invalidates IEEPA.
What's confirmed
- The report from the Commerce Department on Wednesday (Nov 4) also showed the US logged record goods trade deficits with several countries, including Mexico, Vietnam, Taiwan and South Korea, despite President Donald Trump’s aggressive tariffs.
- “But there is a question mark over whether this pace will continue following a string of victories for AI skeptics in gubernatorial races across the country last night.” The trade shortfall contracted 0.7 per cent to US$105 billion, the Commerce Department’s Bureau of Economic Analysis and Census Bureau said.
- “The massive imports of these goods to support the AI build-out have been a key factor behind the widening of the trade deficit to current near-record levels,” said Thomas Ryan, senior North America economist at Capital Economics.
- The economy grew at a 3.4 per cent annualised rate in the July-to-September quarter, the government said in its advance estimate of GDP last week.
What's still developing
- “Trump’s instincts are correct when he said maybe children should make do with two dolls instead of 30. But to lower imports, we need more investment in plants and equipment to drive reshoring. Unfortunately, pushing for lower interest rates combined with a trillion dollar federal budget deficit will not get us there,” he said.
- If the IEEPA tariffs were to remain intact this year, we will likely see an average of monthly deficits in the $50 billion to $70 billion range, taking the deficit below a trillion dollars.
- Your generous contribution will enable us to keep fighting for the prosperous growth of an industrial strategy in many sectors such as Healthcare, Agriculture, Manufacturing, Trade, Technology & Tax.
- Call it decoupling or derisking, but whatever it is that is happening in China is leading to record low trade deficits with the No. 2 economy.
- Find out how enterprises are navigating power constraints and sustainability targets Imports increased 1.2 per cent to US$426.6 billion in September, a record high.
- The government last week reported an acceleration in inflation in September.