US trade deficit contracts in August as imports see steep drop post-tariffs – Firstpost

The US trade deficit narrowed more than expected in August due to a decline in imports, although trade could still weigh on economic growth in the third quarter.

The trade gap shrank 23.8% to $59.6 billion on Wednesday, according to the Commerce Department’s Bureau of Economic Analysis and the Census Bureau.

“New trade policy changes went into effect in August,” including tariff increases for many U.S. trading partners, said Megan Schonberger, senior economist at KPMG. He said wholesalers have reduced stocks to compensate for the decline in imports. Imports fell 5.1% to $340.4 billion, while exports rose 0.1% to $280.8 billion.

The release of federal economic data, from inflation figures to retail sales, was halted due to the 43-day government shutdown, but reports are slowly being released again Important employment data for September is expected on Thursday.

The latest trade report, originally scheduled for publication on October 7, was postponed due to the shutdown.

President Donald Trump’s protectionist trade policy, marked by sweeping tariffs, has caused large fluctuations in imports and trade deficits, distorting the overall economic picture.

President Donald Trump’s rapidly changing tariff policies have caused massive swings in trade flows this year, with importers racing to stock up on inventory ahead of a planned increase in tariffs.

“We expect uncertainty to continue due to ongoing legal challenges and trade negotiations.” schoenberger Added.

He said there are still a number of national security-related investigations underway in the United States, which could lead to new tariffs and potential exemptions in the pipeline.

“This could trigger a new phase of stockpiling and liquidation,” he said.

Since returning to the presidency, Trump has imposed new tariffs on various economies, including so-called “reciprocal” tariffs on nearly all U.S. trading partners, which Washington considers unfair.

Trump also engaged in a tit-for-tat increase in tariffs on China, the world’s second-largest economy, with rates reaching prohibitive triple-digit levels in April – hampering trade.

Among countries, the U.S. goods deficit with Canada narrowed in August, as did that with China.

with inputs from agencies