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The trade deficit narrowed in August to its lowest level in four months. The U.S. trade deficit in goods and services fell to a seasonally adjusted $59.6 billion in August from a revised $78.2 billion in July. The data, which are compiled by the U.S. Census Bureau, had been delayed by seven weeks because of the government shutdown. The total volume of trade fell in August, reflecting a $200 million increase in exports and a much larger $18.4 billion decline in imports. The goods deficit narrowed to $85.6 billion, while the services surplus the United States runs with the rest of the world shrank to $26.1 billion. The trade deficit is a measure of the difference between what the U.S. buys from foreign nations and what the country sells abroad. Year-to-date, exports have increased 5.1%, while imports have increased 9.2% from the same period a year ago.
Total exports rose 0.1% from the previous month. Goods exports fell 0.4% as greater outbound shipments of capital goods, led by a $2.3 billion surge in computers, were largely offset by decreases in consumer goods and industrial supplies. Exports of services rose 0.8% due to increases in travel, maintenance and repair services plus charges for the use of U.S. intellectual property. Exports of transportation services increased, as well.
Imports plunged in August, down 5.1%. Lower imports of industrial supplies and materials led the 5.7% decline in goods imports. August’s data also showed a sharp decline in imports of “nonmonetary” gold, such as jewelry. The fall in imports was broad-based across goods categories, with notable drops in industrial supplies, consumer goods and capital goods. Imports of services managed to rise 0.4% on the back of stronger travel imports and combined imports of business services, telecommunications, and computer and information services. Imported transportation services declined slightly.
The U.S. trade balance may stabilize now that tariff policy is settling down. The Trump administration is working to finalize a series of trade pacts, including a recently enacted trade truce with China, and has paused tariffs on several sectors. The U.S. trade deficit should slowly but steadily start shrinking in coming months if these agreements hold and import demand continues to soften, although the Supreme Court’s pending ruling on the legality of some of Trump’s earlier tariffs creates uncertainty about which tariffs will remain in place for the long term.
Source: Bureau of Economic Analysis
