JAKARTA (TheInsiderStories) – United State (US) trade deficit edged down to a 16-month low, fell 7.6 percent to US$47.2 billion, largely because of lower imports from China tied to the ongoing trade dispute with the Asian giant, said the commerce department on Thursday (12/5).  

Exports dropped 0.2 percent to $207.1 billion and imports lowered 1.7 percent to $254.3 billion. The decline in imports largely reflects a recent up-and-down pattern depending on the timing of new US tariffs on China.

“The US trade declined 7.6 percent in October to its lowest level in 2019 with continued growth in services & crude oil exports. To create opportunities for US companies and bring the trade balance even closer, Congress needs to pass the US-Canada-Mexico agreement.” said secretary of commerce Wilbur Ross in official statement.
Chart by US Commerce Department

In addition, the foreign-trade gap in goods and services contracted 7.6 percent from the prior month to a seasonally adjusted $47.20 billion from $51.1 billion. Based on official data, imports of Chinese goods shrank to $35.3 billion. Auto imports also fell, hurt in part by a month-long General Motors.

Last month, US’ competitor reported the trade surplus widened to $42.81 billion in October of 2019 from $32.97 billion in the same month a year earlier. This was the largest trade surplus since July, as exports declined 0.9 percent year-on-year, while imports dropped at a faster 6.4 percent.

The customs office data showed, exports from China dropped by 0.9 percent year-on-year in October, compared to market estimates of a 3.9 percent decline and after a 3.2 percent fall in September. This was the third straight month of yearly decline in overseas sales, amid weakening global demand and ongoing trade dispute with the Washington.

In contrast, exports of crude oil surged 321,77.3 percent to 45.51 million tonnes. Also, sales grew for rice (34.2 percent to 251,000 tonnes), the data showed.

On the opposite, imports contracted 6.4 percent, less than consensus of an 8.9 percent fall and following an 8.5 percent decline in September. This was the seventh consecutive month of the yearly drop in imports.

The weak import figures are in line with recent readings on shrinking factory activity and bleak producer prices. The slowdown points to lingering weakness in domestic demand and the limited impact of policy stimulus so far.

The data also showed China’ trade surplus with the US increased to $26.42 billion in October from $25.88 billion in September. Considering the first ten months of the year, the trade surplus with the US was recorded at $247.74 billion.

For the January – October period, the trade surplus increased to $341.41 billion from $249.46 billion in the corresponding period the prior year according to the data. Some relief for the export – reliant economy as Beijing tries to reach a partial trade deal with Washington.

US President Donald Trump has used billions of dollars in tariffs on Chinese goods, as his main weapon in the trade war between the world’ two largest economies. China’ ministry of commerce spokesman Gao Feng, said that China and the US have agreed to roll back some of the tariffs.

He asserted, if negotiators reach a phase one agreement in trade talks, then both the US and China should reduce the tariffs by the same amount and at the same time. On Wednesday, the US’ commerce secretary of Wilbur Ross optimistic a “phase one” trade agreement to be signed by Trump and Chinese President Xi Jinping before the end of the year.

by Linda Silaen, Email: linda.silaen@theinsiderstories.com