Trade shift: US deficit shrinks to 2020 low; tariff hikes reshape import flows

The US trade deficit has unexpectedly narrowed to its smallest level since 2020 as President Donald Trump’s sweeping tariff hikes altered import behaviour, according to delayed Commerce Department data released on Thursday.

The deficit fell 10.9% to $52.8 billion in September, even as exports rose 3% to $289.3 billion and imports edged up 0.6% to $342.1 billion, AFP reported. The release is among a set of economic indicators that were delayed due to the record-long federal government shutdown between October and mid-November.




The figures highlight how the year’s tariff escalations — including global increases that took effect on August 7 — have weighed on trade flows. Importers front-loaded purchases ahead of planned duty hikes, while Washington’s multi-country tariff push also dampened inbound shipments.

Economists had expected the September deficit to widen to $62 billion, according to surveys by Dow Jones Newswires and The Wall Street Journal.

Trump’s steeper tariffs, imposed on economies including the European Union and Japan, along with tit-for-tat duties with China that climbed to triple-digit levels earlier this year, have disrupted normal flows of goods. Yale University’s Budget Lab has estimated that the overall effective tariff rate paid by US consumers is at its highest since the 1930s.

Despite the narrower deficit, analysts caution against reading too much into the September data. Oliver Allen, senior US economist at Pantheon Macroeconomics, said in a note that the sharp decline was “almost entirely due to a big jump in exports of gold bullion” and is likely to unwind in the fourth quarter. He added that tariffs “have so far failed to spark a big wave of import substitution.”

Commerce Department data showed that while overall goods imports rose, categories such as capital goods — including computers and electrical apparatus — declined. Goods exports increased across consumer products, pharmaceutical preparations and industrial supplies.

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