U.S. Trade Gap Widens as Travel Restrictions Hit Services Demand
(Bloomberg) -- The U.S. trade deficit widened in October as the value of imports climbed to just below pre-pandemic levels, while travel restrictions and consumer wariness continued to depress services exports.
The shortfall in trade of goods and services expanded to $63.1 billion in October from a revised $62.1 billion in September, according to Commerce Department data released Friday. That compares with a median estimate for a gap of $64.8 billion in a Bloomberg survey of economists.
Total imports increased 2.1% to $245.1 billion, the highest since February, while exports advanced for a fifth month, climbing 2.2% to $182 billion.
The nation’s surplus in services fell 2.2% to $18.3 billion, the lowest since August 2012, while the merchandise-trade deficit increased 0.8% to $81.4 billion.
The widening of the deficit reflects a virtual standstill in travel, with spending by visitors to the U.S. dropping to $4.07 billion, more than two thirds lower than in February.
Combined, the value of U.S. exports and imports climbed to $427.2 billion, the highest since February, but still down from $469 billion at the end of 2019.
Before taking office in 2017, President Donald Trump had called for “eliminating America’s chronic trade deficit” and listed China, Canada, Germany, Japan and South Korea as the main culprits. The data show that gains made before the pandemic have been eroded as the outbreak upended supply chains and demand.
While Trump’s approach has resulted in trade wars with No. 1 trading partner China, President-elect Joe Biden has indicated a more global approach relating to Beijing. That said, Biden told the New York Times this week he would keep the phase-one trade deal with the Asian nation in place while he reviews U.S. policy and consults with key allies.
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