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Home » Global Supply Chain Management » U.S. Trade Gap Hits Seven-Month High Amid Expanding Tariff War

U.S. Trade Gap Hits Seven-Month High Amid Expanding Tariff War

U.S. Trade Gap Hits Seven-Month High Amid Expanding Tariff War
November 8, 2018
Bloomberg

The U.S. 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 $54bn, Commerce Department data showed last week. The median estimate of economists surveyed by Bloomberg called for a deficit of $53.6bn. Imports and exports both rose 1.5 percent.

The monthly report provides details around third-quarter data 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 $212.6bn, including gains in petroleum products, gold, oil and aircraft. Imports increased to $266.6bn, boosted by a range of capital and commercial goods. The overall trade gap for goods increased to $76.3bn — also a record.

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

American soybean exports fell 29 percent from the prior month to $1.79bn, 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.

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.

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    KEYWORDS Aerospace & Defense Chemicals & Energy Global Supply Chain Management Global Trade & Economics North America
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