U.S. trade gap hits seven-month high amid expanding tariff war

THE U.S. TRADE DEFICIT 1.3 percent from the prior month to $54 billion in September. / BLOOMBERG NEWS FILE PHOTO/TIM RUE
THE U.S. TRADE DEFICIT 1.3 percent from the prior month to $54 billion in September. / BLOOMBERG NEWS FILE PHOTO/TIM RUE

NEW YORK – The United States trade deficit widened more than forecast in September to a seven-month high as imports expanded and the merchandise gap with China hit a record amid an escalating tariff war.

The gap for goods and services increased 1.3 percent from the prior month to $54 billion, Commerce Department data showed Friday. The median estimate of economists surveyed by Bloomberg called for a deficit of $53.6 billion. Imports and exports both rose 1.5 percent.

The monthly report provides details around third-quarter data released last week that showed trade imposed the biggest drag on growth in 33 years amid tariffs on China and counter-levies by the Asian nation. While President Donald Trump is threatening more action, U.S. businesses already are facing higher prices and supply-chain disruptions as they rush to buy materials and other items.

Overall exports rose to $212.6 billion, including gains in petroleum products, gold, oil and aircraft. Imports increased to $266.6 billion, boosted by a range of capital and commercial goods. The overall trade gap for goods increased to $76.3 billion, also a record and in line with the preliminary figure last week.

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The unadjusted merchandise trade gap with China, the world’s second-biggest economy, widened to $40.2 billion from $38.6 billion.

American soybean exports fell 29 percent from the prior month to $1.79 billion, the lowest since February. That extended the unwinding of a run-up in the second quarter before Chinese retaliatory levies were imposed.

Analysts are monitoring the trade data to assess whether the tariff headwinds are starting to inflict more pain on the economy than they anticipated. The stronger dollar also is a potential hurdle for exports of American-made goods.

An index of U.S. manufacturing fell by more than forecast to a six-month low in October as a measure of export orders declined to the lowest since 2016, data from the Institute for Supply Management showed Thursday.

Gross domestic product expanded at a 3.5 percent pace in the July-to-September period, marking the best back-to-back quarters of growth since 2014. Net exports subtracted 1.78 percentage points from GDP growth, reflecting an unwinding of the boost in the prior quarter when U.S. exporters of soybeans and other products stepped up shipments to beat retaliatory tariffs from abroad.

Other details

  • September goods trade deficits with Mexico and Canada both narrowed on an unadjusted basis; the gap with Europe shrank to $10.6 billion from $15.7 billion
  • Exports and imports of goods account for about three-fourths of America’s total trade; the U.S. typically runs a deficit in merchandise trade and a surplus in services

Shobhana Chandra is a reporter for Bloomberg News.