WASHINGTON (AP) — The U.S. trade deficit fell in September to the lowest level in five months as imports dropped more sharply than exports and America ran a rare surplus in petroleum.
The Commerce Department said Tuesday the September gap between what America buys from abroad and what it sells shrank by 4.7 percent to $52.5 billion. That was down from the August deficit of $55 billion and was the smallest imbalance since April.
The politically sensitive deficit with China edged down 0.6 percent to $31.6 billion.
President Donald Trump has imposed tariffs on more than $360 billion in Chinese imports. China has retaliated with its own tariffs on American products as the world’s two largest economies have engaged in a trade war that has rattled global financial markets and slowed economic growth.
The September deficit reflected the fact exports fell 0.9 percent to $206 billion, but imports fell an even faster 1.7 percent to $258.4 billion. For the first nine months of this year, the U.S. deficit is running 5.4 percent below the same period a year ago. The deficit for all of 2018 totaled $627.7 billion.
Economists said they expect the trade deficit will be a drag on growth in the current October-December quarter as the continued weakness of the global economy further depresses demand for American exports.
“It’s hard to see anything other than further weakness in exports over the coming months,” said Andrew Hunter, senior U.S. economist at Capital Economics.
So far this year, the deficit with China is 12.8 percent lower than the same period a year ago, although it remains the largest imbalance America runs with any country.
The two countries are currently trying to complete a phase one trade deal that would deal with some of the administration’s complaints China is stealing U.S. technology and pursuing other unfair trade practices.
Investors are hoping a phase one agreement will halt the imposition of any further tariffs. Those tariffs have disrupted global supply chains and caused businesses to pull back on their investment spending, resulting in slower economic growth in the U.S. and other countries.
The September trade report showed the U.S. ran the first surplus in petroleum in more than four decades, according to government records that go back to 1978.