USA trade gap widens in October on record imports

US trade gap widens in October on record imports

Good coming into the US from China, Mexico and the European Union all hit record levels, which boosted the trade gap to $48.7 billion - from $44.9 billion in September- and is the highest since President Trump took office in January.

With imports rising and exports edging lower, the Commerce Department released a report on Tuesday showing the USA trade deficit widened more than expected in the month of October.

Exports were unchanged at US$195.9 billion, but services exports were also the highest on record at US$65.6 billion.

Economists had expected a deficit of $2.7 billion, according to Thomson Reuters.

The goods deficit with China increased from $34.6 billion in September to $35.2 billion in October.

Prices were up 1.5 per cent and volumes increased 1.2 per cent.


Exports to China, meanwhile, were the highest in nearly four years, at US$13 billion.

Meanwhile, imports fell to $45.9 billion in October, mainly due to a drop in motor vehicles and parts which fell 8.1 per cent. Import volumes fell 3.9 per cent while prices rose 2.4 per cent. "Even accounting for some rebound in the final two months of the quarter, it seems likely that imports will outpace exports in the fourth quarter, meaning net trade will be a small drag on economic growth", said Michael Pearce, an economist at Capital Economics, in a note to clients.

On the other hand, the Commerce Department said the value of exports edged down by less than a tenth of a % to USD195.9 billion. The U.S. crude oil imports rose to $10.664 billion in October from $9.131 billion in September. The overall trade deficit widened 11.9% so far this year compared with the same period in 2016. US exports to China increased $2.2 billion to $13.0 billion, primarily driven by soybeans and crude oil.

The White House is attempting to renegotiate the North American Free Trade Agreement, but has said it could walk away from the pact with Mexico and Canada if it can't broker what the administration sees as a better deal.

The reason for the deficit is that "Americans are spending more than they produce".

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