U.S. tariffs against China triggered a slide in imports in November, contributing to the lowest trade deficit in three years. U.S. exports also picked up, the Commerce Department said Tuesday. The foreign-trade gap in goods and services contracted 8.2% from the prior month to a seasonally adjusted $43.09 billion in November, the department said. That was the lowest goods and services deficit since it hit $42 billion in October 2016.
Exports boost GDP while imports reduce it, and Tuesday’s report suggests trade is likely to make a large positive contribution to economic growth in the fourth quarter, after proving a mild drag in the third quarter. Net exports subtracted 0.14 percentage point from the third quarter’s 2.1% GDP growth rate, compared with a 0.68 percentage point drag in the second quarter.
“Over the past year we’ve seen trade being a small drag on the economy” due to weak global growth and the trade war, said Andrew Hunter, an economist at Capital Economics. “It looks like that drag’s starting to fade” as global activity picks up and trade tensions with China ease.
Imports decreased by 1.0% in November from the prior month. The drop was due to lower imports of capital goods such as computers and consumer goods such as cellphones. Cellphone imports dropped by 5.3% from the prior month and imports of toys fell 2.4%. The goods deficit with China fell 7.9% in November from the prior month to $25.61 billion.