After five straight months of increases, the U.S. trade deficit fell with its global partners for the first time during the month of November–a major win for U.S. President Donald Trump who instituted tariffs in 2018 to help close the gap.
On Wednesday, government data released showed the gap closed to $49.3 billion from $55.7 billion in October–an 11.5 percent decline. Economists surveyed by Dow Jones were forecasting a deficit of $54.3 billion.
“I can say two things about trade: 1) the numbers are likely to continue to exhibit elevated volatility from month to month as shippers grapple with heightened policy-related uncertainty and 2) today’s data will boost estimates of Q4 GDP growth,” said Stephen Stanley, chief economist of Amherst Pierpont Securities.
The a slide in imports helped to narrow the gap, which fell 2.9 percent to $259.2 billion. In addition, exports edged lower to $209.9 billion, a 0.6 percent drop.
Overall, the year-to-date goods and services deficit rose by $51.9 billion, which represents a 10.4 percent rise from the same time in 2017. Exports rose $157.1 billion or 7.3 percent, while imports increased $208.9 billion or 7.9 percent.
“America’s trade fight with the world has finally started to slow global trade and only time will tell whether this is a good thing for the economy in the long run,” said Chris Rupkey, chief financial economist at MUFG, in a note.
Protecting American Businesses
During his State of the Union speech on Tuesday, President Trump reiterated that a trade deal with China is imperative in order to protect American workers and businesses.
“I have great respect for President Xi, and we are now working on a new trade deal with China,” he said Tuesday at the Capitol in Washington, referring to his Chinese counterpart Xi Jinping. “But it must include real, structural change to end unfair trade practices, reduce our chronic trade deficit, and protect American jobs.”
Related: Investors Should Consider Emerging Markets, Trade Deal or Not
U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin will shore up a delegation to China next week to pave the way for a meeting between Trump and Xi. President Trump blamed past U.S. administrations “for allowing this travesty to happen” between the U.S. and China, while saying that the trade gap is indeed narrowing.
“We are now making it clear to China that after years of targeting our industries, and stealing our intellectual property, the theft of American jobs and wealth has come to an end,” said Trump. “Therefore, we recently imposed tariffs on $250 billion dollars of Chinese goods — and now our Treasury is receiving billions and billions of dollars.”
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