The Commerce Department reported Wednesday that the gap between what the United States buys from other countries and what it sells them fell to $59.6 billion in August, from $78.2 billion in July.
A drop in imports and the trade deficit is good for economic growth because foreign products are subtracted from the nation's gross domestic product. GDP is the output of a nation's goods and services.
“August’s smaller trade deficit will be a tailwind for third quarter real GDP, since it means that more U.S. expenditures were directed toward domestically-produced goods and services rather than foreign ones,” Bill Adams, chief economist at Comerica Bank, wrote in a commentary. "While this release is quite dated because of the government shutdown, it contributes to evidence that the economy was growing briskly in the third quarter.''
Tariffs, which Trump says will protect U.S. industries and lure factories to America, are paid by importers who typically attempt to pass along the higher cost to their customers.
The president dropped tariffs last week on beef, coffee, tea, fruit juice, cocoa, spices, bananas, oranges, tomatoes and certain fertilizers, saying they “may, in some cases” have contributed to higher prices.
