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Amid Strong Dollar, Weak Overseas Demand, US’s Trade Deficit Increases Marginally

Exports were hampered by weaker global demand and the strong dollar increases the cost of US goods to foreign buyers while decreasing the cost of imports to US buyers

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The US trade deficit increased slightly in October over the previous month, to USD 78.2 billion.

The latest reading increased by only 5.4 per cent, less than half the rate of the revised September reading when the trade deficit increased by 12.7 per cent to USD 74.1 billion.

Exports were hampered in both months by a strong dollar and weaker global demand. A strong dollar increases the cost of US goods to foreign buyers while decreasing the cost of imports to US buyers. However, recent readings show that economic slowdowns in overseas markets have also impacted US exports.

According to the most recent report, exports fell 0.7 per cent in October compared to the previous month and are down nearly 2 per cent from the record exports set in August. The majority of the drop was in goods exports rather than services, which fell 4.4 per cent compared to August.

According to the report's data, oil prices have fallen since early this year. The average price of crude oil imports in the month was USD 82.05 per barrel, a 5.7 per cent decrease from September and a 21.7 per cent decrease from the peak in June.

However, in terms of dollars, the United States now exports more petroleum products than it imports. As a result, a lower crude price does not help the trade deficit as much as it did in the past, when crude and petroleum product imports vastly outweighed exports.

The trade deficit between the United States and China shrank significantly in the latest report, falling 22.6 per cent to USD 28.9 billion from USD 37.3 billion, contributing to the minor trade gap increase.

Although the majority of the narrowing was due to a 31.3 per cent increase in US exports to China compared to September, a 9.5 per cent decrease in US imports of Chinese goods was also a factor in the two countries' smaller trade deficit.

Tags assigned to this article:
global trade trade deficit united states