Spencer Platt, Getty Images
Industryweek 25340 102617 Shipping Containers Trade Spencerplatt2

US Trade Gap Widens to 10-Year High

Dec. 6, 2018
The goods trade gap with China widened to a record.

The U.S. trade deficit widened more than forecast in October to the highest in a decade, underscoring continued fallout from the trade dispute with China. The goods trade gap with China widened to a record.

The gap increased 1.7% to $55.5 billion, from a revised $54.6 billion in the prior month, Commerce Department data showed Thursday. The median estimate of economists surveyed by Bloomberg called for a deficit of $55 billion. Imports of all goods and services rose to a record, while exports were little changed.

Net exports may again weigh on growth in the fourth quarter -- albeit less than in the prior three months -- amid a strong dollar and continued uncertainty over trade policy. Data are likely to remain volatile, reflecting a rush of activity ahead of U.S. threats to further raise levies, and a subsequent unwinding of that effect should Beijing restart some imports.

Overall exports came in at $211 billion after $211.4 billion the prior month. That included record shipments of petroleum, industrial materials and consumer goods.

Imports rose 0.2% to $266.5 billion from $265.9 billion, reflecting record purchases of autos and consumer goods. The overall merchandise-trade deficit was also the highest ever.

The wider trade gap comes at the start of a quarter in which the economy already is projected to moderate, after posting the best back-to-back growth since 2014. The negative fallout may be smaller compared to the third quarter, when the drag from net exports matched the worst since 1984.

The report showed the unadjusted goods-trade gap with China, the world's second-biggest economy, widened to $43.1 billion in October from $40.2 billion.

American soybean exports continued to slide, reflecting a reversal of the run-up earlier this year ahead of China’s retaliatory tariffs on the U.S. The Thursday data showed that soybean sales to overseas customers plunged by almost half in October from the prior month.

Beyond agricultural products, the tariff headwinds are hurting businesses more broadly, with rising prices for materials and supply-chain disruptions. Cooling global growth also would be a hurdle for exports of American-made goods.

After eliminating the influence of prices, which renders the numbers used to calculate gross domestic product, the goods trade deficit rose to $87.9 billion from $87.2 billion in the prior month. On an unadjusted basis, the goods gap with Europe grew to a record $17.6 billion from $10.6 billion.

The merchandise trade deficit narrowed with Mexico and widened slightly with Canada.

Exports and imports of goods account for about three-fourths of America’s total trade; the U.S. typically runs a deficit in merchandise trade and a surplus in services.

By Shobhana Chandra

Popular Sponsored Recommendations

Sprint Implementation for Digital Transformation

Feb. 1, 2024
Discover a revolutionary approach to digital transformation. Uncover the flaws in current methods that cause 70% project failure rate. Learn how sprint implementation can maximize...

Future-Proofing Your Business with Smart Manufacturing

Jan. 2, 2024
An IndustryWeek-Plant Services-Smart Industry-Automation World-hosted webinar sponsored by Amazon Web Services

The Year of Results: Four Expectations for 2024 Manufacturing

Feb. 1, 2024
In 2024 manufacturers will need to focus on results, from achieving operational excellence to enhancing digital transformation, to navigating compliance. Stay ahead with crucial...

Capitalize on Energy Flexibility with These Four Strategies

Feb. 4, 2024
Energy flexibility – the ability to temporarily reduce or shift energy use – can unlock revenue, lower energy costs, and more. Learn how to capitalize on energy flexibility with...

Voice your opinion!

To join the conversation, and become an exclusive member of IndustryWeek, create an account today!