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The US trade deficit narrowed to its lowest level since 2009 in October, as Donald Trump’s tariffs continued to prompt fluctuations in imports.
The gap between imports and exports of goods fell 39 per cent from the previous month to $29.4bn, according to data released by the US Department of Commerce on Thursday.
That reduced the deficit to its narrowest level in more than 16 years, and much narrower than the $59.8bn predicted by economists polled by Reuters.
Trump has made reducing the country’s trade deficit a cornerstone of his economic policy and has promoted tariffs as a lever for doing so.
The 3.2 per cent drop in imports was mostly fuelled by pharmaceutical products. The US president threatened tariffs on the pharma sector throughout 2025, prompting companies to boost their imports of those goods after he returned to the White House last January.
However, beginning in late September, Trump forged a series of deals with drugmakers that would provide them with exemptions from new duties.
Joe Brusuelas, chief economist at auditor RSM US, said that the decline in the trade deficit with Ireland, where many large US pharmaceuticals are domiciled, suggested the Trump administration’s trade crackdown was paying off.
“This does look like the attempt to rebalance global trade by Washington is impacting the behaviour of large global firms,” he said.
US exports climbed 2.6 per cent in October, boosted by non-monetary gold. September’s smaller-than-estimated trade deficit data was also driven by gold bullion exports.
The lower-than-expected trade deficit for October is expected to provide a tailwind for fourth-quarter growth.
The Atlanta branch of the Federal Reserve estimated on Thursday that real GDP growth for the three months to December 31 will be 5.4 per cent, up from 2.7 per cent in its previous forecast on January 5.
But economists at Citi cautioned that increased gold exports would not affect GDP and added that “falling imports are not indicative of stronger underlying domestic demand, and . . . imply headwinds for aggregate consumption or investment”.
Bradley Saunders of Capital Economics wrote in a note on Thursday that “the headline figures were once again distorted by large swings in particular areas of trade”, citing the upswing in non-monetary gold exports and the fall in pharmaceutical imports.
Additional reporting by Patrick Temple-West and Claire Jones
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