WASHINGTON • The US trade deficit fell to a more than three-year low in November as imports declined further, likely weighed down by the Trump administration's trade war with China, while exports rebounded - suggesting the economy ended 2019 on a solid footing.
The Commerce Department yesterday said the deficit decreased 8.2 per cent to US$43.1 billion (S$58.2 billion), the smallest since October 2016. The percentage drop was the largest since January.
The trade deficit has narrowed 0.7 per cent through November and is on track to record its first annual decline since 2013. While the shrinking trade bill should provide a boost to gross domestic product (GDP) in the fourth quarter, falling consumer goods imports also suggest a cooling in domestic demand.
Data for October was revised to show the trade gap declining to US$46.9 billion instead of the previously reported US$47.2 billion. Economists polled by Reuters had forecast the trade gap narrowing to US$43.8 billion in November.
The goods trade deficit with China - the focus of the White House's "America First" agenda - tumbled 15.7 per cent to US$26.4 billion, with imports dropping 9.2 per cent and exports jumping 13.7 per cent. The goods trade gap with the European Union fell 20.2 per cent to US$13.1 billion.
The United States and China are embroiled in a bruising trade war, and Washington has also tussled with other trading partners, including the EU, Brazil and Argentina, accusing them of devaluing their currencies at the expense of American manufacturers.
Though Washington and Beijing last month hammered out a "Phase 1" trade deal, considerable confusion remains about the details of the agreement. President Donald Trump said last Tuesday that the partial deal would be signed on Jan 15 at the White House.
The 18-month-long US-China trade war has undermined business investment, which together with slowing growth overseas have led to a slowdown in manufacturing. Economists expect manufacturing to continue to struggle without a complete rollback of tariffs.
When adjusted for inflation, the US goods trade deficit decreased US$3.7 billion to US$75.3 billion in November, the smallest since March 2017.
The so-called real trade deficit projected for the fourth quarter is below the average for the July-September period.
Economists expect trade will add at least 1.5 percentage points to GDP growth in the fourth quarter after being a drag for two straight quarters.