The US trade deficit in October unexpectedly fell to its lowest level in more than a year as Americans imported billions less in autos and consumer goods like toys and mobile phones, according to government data out Thursday.
The reduction in the deficit — a central goal of President Donald Trump’s aggressive trade agenda — reflected the decline in the worldwide exchange of goods and services as the global economy weakens.
But it could help lift US economic growth in the final quarter of this year, since deficits subtract from GDP.
Economists said Thursday however that imports were likely to rise in the coming months as a hit from September’s tariffs on Chinese merchandise recedes and shoppers resume buying.
The overall deficit tumbled 7.6 percent from September’s level to $47.2 billion, which was below what economists had been expecting and the lowest level since May 2018, according to the report.
In the first 10 months of 2019 the trade deficit has grown only 1.3 percent over the same period in 2018, marking a slowdown after years of steady increases.
Trade with China also continued to slide as the world’s two largest economies maintained mountainous tariffs on each other’s goods, according to the monthly Commerce Department report.
Speaking to reporters on Thursday, President Donald Trump dodged questions on whether a new round of tariffs on about $160 billion in Chinese goods would take effect as scheduled in 10 days’ time.
“Something could happen but we are not discussing that yet,” he said. “We are having very good discussions with China.”
Total US exports in October edged downward to $207.1 billion as foreign buyers took in fewer US-made aircraft engines and industrial supplies, goods that .
But imports fell much faster, sinking 1.7 percent to their lowest level since April at $254.3 billion.
Ahead of the holiday shopping period, and with more Trump tariff increases looming for many Chinese-made goods, US importers took in $800 million less in auto parts, while mobile phone imports fell by $400 million, and toys and sporting goods fell by $300 million.
Imports of trucks, busses and passenger cars fell by $1 billion.
The deficit with China fell 0.8 percent in October from the prior month, and is down nearly 15 percent in the year to date as the trade war continues to weigh.
“We have to presume the sharp narrowing of the trade deficit is temporary since we see the US economy operating at close to capacity… and consumer demand has continued to expand,” RDQ Economics said in a client note.