Imports from China shrank in October after the U.S. raised tariffs.
The deficit in the trade of goods with China narrowed by 1.1 percent to $31.3 billion in October and is down 14.6 percent so far this year, the Commerce Department said Thursday.
U.S. imports from China fell to $40.1 billion in October, down from $40.2 billion in September. Those figures are down sharply from a year ago, when October imports from China were $50.2 billion and September imports were $50 billion.
So far this year, imports of goods from China are down significantly compared with a year ago. As of the end of October, the U.S. has imported $382.1 billion of goods in 2019, compared with $447.2 in the first 10-months of 2018. That represents a 14.7 percent declined.
U.S. exports of agriculture goods to China rose to $1.2 billion last month, the second highest level of exports since before the tariff fight began last year.
The decline in imports in October is likely due, in part, to the new tariffs imposed on September 1 on about $111 billion of goods made in China. So far the U.S. has imposed new or higher tariffs on about $360 billion of Chinese imports.
A 15 tariff on another $165 billion of imports is scheduled to kick-in on December 15. Those tariffs were widely expected to be delayed if the U.S. and China signed a phase one trade deal. But a recent escalation in trade tensions, largely due to China’s demands that the U.S. rollback existing tariffs, has revived the chances the new tariffs will be applied.
The total gap between what America sells and what it buys abroad dropped 7.6 percent to $47.2 billion in October. Imports tumbled 1.7 percent to $254.3 billion on reduced purchases of foreign oil, cars and auto parts and pharmaceuticals. Exports dipped 0.2 percent to $207.1 billion on a drop in sales of soybeans and aircraft engines.
The narrower trade gap will make a positive contribution to fourth-quarter gross domestic product.
Many mainstream economists claim the trade deficit reflects an economic reality that doesn’t yield much to changes in government policy: Americans consume more than they produce, and imports fill the gap.
But economic nationalists point out that the cause of this gap is actually government policies, such as bad trade agreements, that have resulted in so much of U.S. production moving to foreign countries. The U.S. economy is capable of producing far more than the U.S. consumes.
The goods deficit with Mexico dropped 1.4 percent to $8.8 billion but is up 28 percent so far in 2019.
President Donald Trump, declaring persistent trade deficits a sign of U.S. economic weakness, has slapped taxes on imported steel and aluminum and hundreds of Chinese goods and has sought to replace a North American free trade pact that he says puts U.S. factories at a disadvantage to low-wage plants in Mexico. Congress has yet to ratify the revamped version he negotiated last year with Mexico and Canada.
The trade gap is still 1.3 percent wider so far this year than it was in January-October 2018, despite dropping in September and October.
A strong dollar is another consistent obstacle to more balanced trade. President Donald Trump has frequently blamed the Federal Reserve’s monetary policy for inflating the value of the dollar and hurting exports. Higher interest rates in the U.S. compared with abroad make the U.S. dollar more attractive, pushing up the value of the dollar compared with foreign currencies. Many developed countries around the globe currently have negative interest rates for government debt.
In October, the United States ran a $68 billion deficit in the trade of goods such as autos and appliances. But it ran a $20.8 billion surplus in services, including education and banking.
–The Associated Press contributed to this report.