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The trade deficit got smaller in September as the US and China work toward tariff truce

Key Points
  • The U.S. trade deficit fell to $52.5 billion in September, but was a bit higher than expectations.
  • As the two sides worked towards a tariff truce, the deficit with China fell 3.1% for the month.
  • However, the shortfall remains well above where it was when President Donald Trump took office.

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September trade deficit down to $52.5 billion from $54.9 billion

The U.S. trade deficit with its global partners contracted to $52.5 billion in September as the White House continued its efforts to close the gap in goods and services, according to a Commerce Department report Tuesday.

The deficit was slightly above expectations of $52.2 billion, according to economists surveyed by Dow Jones. August's shortfall was just over $55 billion.

As the administration continues its efforts to close the first phase of a tariff deal with China, the trade balance remains 13.1% higher from the $46.4 billion level when President Donald Trump took office. Consumers continue to demand foreign goods amid a decade-long economic expansion.

On a year-over-year basis, the current trade deficit is 5.4% higher than the same period in 2018.

With the two sides working toward an agreement, the deficit with China fell 3.1% to $28 billion for the month. 

Overall, exports fell $1.8 billion to $206 billion while imports also were down, dropping $4.4 billion to $258.4 billion. The U.S. recorded its first petroleum surplus, of $252 million, since 1978 as the nation continues to push its energy output.

Foods, feeds and beverage exports fell $1.5 billion due largely to a $1 billion drop in soybeans. Automotive exports also fell by $1 billion and capital goods increased by $800 million thanks to a collective $1.3 billion rise in aircraft-related products.

On the import side, consumer goods fell $2.5 billion as cell phones and other household goods declined by $800 million and toys games and sporting goods declined by $600 million. Capital goods imports were off $1.1 billion on a $600 million reduction in semiconductors. Automotive imports were down $1.1 billion.

By nation, the largest surplus was with South and Central America at $5 billion, while the biggest deficit after China was with the European Union at $15.7 billion. The U.S. also continues to run deficits with Mexico ($9.1 billion), Japan ($5.9 billion) and Germany ($5 billion).

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source: CNBC

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