The trade war and trade agreement with China which is likely to sign the middle of January 2019, weighed down the imports and exports rebounded, suggesting solid economic growth in the fourth quarter. As a result, the U.S. trade deficit at a more than three-year low in November as imports declined further.
The trade deficit tumbled in November for the second month in a row. In November The trade gap closed by 8.2% to USD43.1 billion in November, the Commerce Department said, down from USD46.9bn in the previous month to register the lowest monthly deficit since October 2016.
The US exports rose 0.7% during the month i.e. The trade gap narrowed 0.7% through November and is on track to record its first annual decline since 2013, while imports dropped 1%, helped by a slump in imports from China.
The Commerce Department said the third monthly decline in the trade deficit should give a boost to overall growth as measured by the gross domestic product in the fourth quarter. This boost to US exports also helps to improve the trade balance, propelling concerns that President Trump will expand his campaign to reduce the US trade deficit, which has so far focused on China, the EU, and the UK.
President Trump is going to sign a Phase one trade deal with China but will leave many tariffs on the supply of Chinese goods to the US market while China has to purchase agricultural goods worth USD40 billion along with energy and other goods. This will boost US exports and ultimately will help to reduce the trade deficit.
Economists had forecast the trade shortfall tightening to USD43.8 billion in November. The goods trade deficit with China, the focus of the White House’s “America First” agenda fell down 15.7% to USD26.4 billion, with imports dropping 9.2% and exports jumping 13.7%.