The US trade deficit narrowed sharply in August, falling 23.8% to $59.6 billion, as imports dropped 5.1% and exports rose slightly, Reuters reports. The smaller-than-expected deficit could support third-quarter economic growth, following swings caused by past tariffs under President Trump’s protectionist policies. While trade previously subtracted from GDP in Q1, it boosted growth in Q2, and economists expect strong GDP growth above 3% for the third quarter despite ongoing trade fluctuations. They write:
The U.S. trade deficit narrowed more than expected in August as imports declined, but trade could still subtract from economic growth in the third quarter.
The trade gap contracted 23.8% to $59.6 billion, the Commerce Department’s Bureau of Economic Analysis and Census Bureau said on Wednesday. Economists polled by Reuters had forecast the trade deficit would ease to $61.0 billion.
Imports decreased 5.1% to $340.4 billion, while exports edged up 0.1% to $280.8 billion.
The report, which was initially scheduled for release on October 7, was delayed because of the recently ended 43-day shutdown of the government. […]
The third-quarter GDP report was due in late October but delayed by the government shutdown. The economy grew at a 3.8% pace in the second quarter, with a smaller trade deficit being the key driver.
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