The Urethane Blog

Trade News

US trade deficit narrows much more than expected

  • The U.S. trade deficit fell to $49.3 billion in November, the first decline after five straight months of increases.
  • But on a year-over-year basis, the gap rose by 10.4 percent.

The U.S trade deficit with its global partners fell in November for the first time after five straight months of increases as the shortfall with China and several other countries declined.

Tightening the balance between imports and exports has been a major goal of the Trump administration, which last year started levying tariffs in an effort to close the gap.

A release from the government Wednesday showed the gap had closed in November, the most recent month for which data was available, to $49.3 billion from $55.7 billion in October, representing an 11.5 percent decline. Economists surveyed by Dow Jones had been looking for a deficit of $54.3 billion.

The decline was largely due to a slide in imports, which fell 2.9 percent to $259.2 billion. Exports edged lower to $209.9 billion, a 0.6 percent drop.

In all, the year-to-date goods and services deficit increased by $51.9 billion, a 10.4 percent rise from the same period in 2017. Exports rose $157.1 billion or 7.3 percent, while imports gained $208.9 billion or 7.9 percent.

On a broader level, the drop in the trade deficit will serve as a boost to fourth-quarter GDP, which is expected to show a 2.5 percent increase, according to CNBC’s Rapid Update tracker as well as the Atlanta Fed’s GDPNow measure.

How the trade tensions play out over a longer period, though, is unknown as the U.S-China talks continue ahead of a March 2 deadline for imposition of another round of tariffs.

“America’s trade fight with the world has finally started to slow global trade and only time will tell whether this is a good thing for the economy in the long run,” Chris Rupkey, chief financial economist at MUFG, said in anote.

Among individual countries, the gap with China closed $2.8 billion to $35.4 billion.

Treasury Secretary Steven Mnuchin told CNBC in an interview Wednesday that trade talks have been “very productive.”