Star Metro - US trade gap shrinks to narrowest since 2020 after tariff hikes

The overall trade deficit fell 10.9 percent to $52.8 billion, the lowest since mid-2020 during the Covid-19 pandemic.

This came as exports rose 3.0 percent to $289.3 billion, while imports edged up 0.6 percent to $342.1 billion, the Commerce Department said.

The trade figures are the latest in a series of official economic reports postponed due to a record-long government shutdown between October and mid-November.

The stoppage had left officials and companies to navigate policy and business decisions without key indicators on the health of the world's biggest economy. But reports are now trickling out.

Thursday's figures also showed how Trump's new tariffs this year continue to weigh on trade, after sweeping increases targeting dozens of trading partners hit the country's imports in August as well.

On August 7, Trump's steeper global tariffs took effect on goods from economies ranging from the European Union to Japan.

Trade flows have been heavily swayed this year by the president's fast-changing duties, as importers rushed to stock up on inventory ahead of various planned hikes in tariffs.

The Budget Lab at Yale University estimated as of November that consumers face an overall average effective rate that is the highest since the 1930s.

In particular, Washington and Beijing engaged in a tit-for-tat tariff escalation earlier this year that took duties to prohibitive triple-digit levels, snarling trade flows.

Both sides have since agreed to a de-escalation, although the truce has been uneasy.

Trump has moved to end the "de minimis" exemption allowing lower value shipments to enter the country duty-free as well.

Surveys of economists conducted by Dow Jones Newswires and The Wall Street Journal had instead expected September's trade deficit to widen to $62.0 billion.

But Oliver Allen, senior US economist at Pantheon Macroeconomics, warned in a note that "the marked drop in the overall trade deficit in September tells us little, since it was almost entirely due to a big jump in exports of gold bullion."

He expects this export strength to unwind in the fourth quarter of the year.

He noted that "tariffs have so far failed to spark a big wave of import substitution."

In September, US goods imports increased as a whole, but those of capital goods like computers and electric apparatus dropped, according to Commerce Department data.

US goods exports climbed as well, with those of consumer goods like pharmaceutical preparations and industrial supplies rising.

M.Johnston--SMC