WASHINGTON (AP) — The United States (US) trade deficit narrowed in October as imports fell faster than exports. The politically sensitive trade gap with China dropped. The Commerce Department said on Thursday that the gap between what America sells and what it buys abroad dropped 7.6 per cent to USD47.2 billion in October. Imports tumbled 1.7 per cent to USD254.3 billion on reduced purchases of foreign oil, cars and auto parts and pharmaceuticals. Exports dipped 0.2 per cent to USD207.1 billion on a drop in sales of soybeans and aircraft engines.
The deficit in the trade of goods with China narrowed by 1.1 per cent to USD31.3 billion in October and is down 14.6 per cent so far this year. The goods deficit with Mexico dropped 1.4 per cent to USD8.8 billion but is up 28 per cent so far in 2019.
US President Donald Trump, declaring persistent trade deficits a sign of US economic weakness, has slapped taxes on imported steel and aluminium and on numerous Chinese goods. He has also sought to replace a North American free trade pact that he said puts US factories at a disadvantage to low-wage plants in Mexico. Congress has yet to ratify the revamped version he negotiated last year with Mexico and Canada. The trade gap is still 1.3 per cent wider so far this year than it was in January-October 2018, despite dropping in September and October.
Mainstream economists say the trade deficit reflects an economic reality that doesn’t yield much to changes in government policy: Americans consume more than they produce, and imports fill the gap.
A strong dollar is another consistent obstacle to more balanced trade. The American currency is widely used in international business transactions and is therefore in high demand, propping up its value and putting American exports at a price disadvantage in world markets.
In October, the US ran a USD68 billion deficit in the trade of goods such as autos and appliances. But it ran a USD20.8 billion surplus in service.