U.S.A. trade deficit — the amount by which the value of a country’s imports exceeds its exports — fell to $59.6 billion in August Forbes quote data published by the Bureau of Economic Analysis (BEA) on Wednesday.
The latest figures represent the narrowest gap compared to $58.3 billion in October 2023. It represents a 24 percent drop from July’s deficit of $78.2 billion.
The notable drop was mainly due to a 5.1 percent drop in imports, the biggest drop in four months, while exports rose a tiny 0.1 percent, the BEA said.
Tariffs and economic impact
The figures come in the wake of far-reaching tariffs announced by President Donald Trump on “Liberation Day” in April and then expanded in August. These measures increased the effective tariff rate imposed by the US to 18 percent.
The introduction of tariffs was twice suspended until August 1. Trump signed an executive order setting revised rates for 68 countries and the European Union, with some of his original levies modified following agreements with nine countries.
The Federal Reserve in Atlanta currently expects US gross domestic product (GDP) to increase 4.2 percent in the third quarter, with exports expected to contribute up to 0.78 percentage point to that growth. This came after a 3 percent rise in GDP during the second quarter that beat the Dow Jones consensus of 2.3 percent, a period when both exports and imports fell, according to Forbes.
Data lag and inflation
The August trade deficit report was delayed by more than a month due to the recent government shutdownwhich ended last week. BEA has yet to confirm a release date for the September data. Similarly, the Census Bureau said on Wednesday that it will release September retail sales and durable goods orders on November 25.
Investors and the Federal Reserve are closely watching economic indicators for evidence that Mr. Trump’s tariffs have rattled markets, including concerns that the tariffs could boost inflation. Although prices have been rising steadily in recent months, the government shutdown has delayed key economic reports, meaning it is not immediately clear whether the inflation rate has picked up since September.
The Bureau of Labor Statistics (BLS), which resumed work for some of its furloughed employees during the shutdown, last reported that consumer prices rose 3 percent year-over-year in September.
