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February 6, 2019 11:30 AM, EST

Trade Gap Narrows to Five-Month Low as Imports Plummet

Trade War Meg Roussos/Bloomberg News

The U.S. trade deficit narrowed in November by more than forecast to a five-month low, as imports tumbled by the most in more than two years amid an intensifying trade war.

The gap fell 11.5% to $49.3 billion, according to a Commerce Department report Feb. 6 that had been delayed a month by the government shutdown. The median estimate of economists surveyed by Bloomberg called for a deficit of $54 billion. Imports of all goods and services dropped 2.9%, while exports declined 0.6%.

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The figures suggest tariffs may be weighing on trade, as imports of Chinese goods fell by about $3 billion in November to $42.8 billion. In addition, levies on items from other countries including aluminum and steel may be weighing on business, with firms being forced to absorb higher prices or to pass those costs on to customers. The data also reflect the outlook in November, when companies expected U.S. tariffs to jump on $200 billion of Chinese goods effective Jan. 1; that increase has since been delayed to March 1 as the United States and China try to resolve their differences on trade.

The report helps fill in a key data gap caused by the shutdown, showing how net exports will affect the reading of economic growth in the fourth quarter. In the prior period, trade was the biggest drag in three decades. President Donald Trump repeatedly has pledged to reduce the deficit, saying it shows how other nations take advantage of the United States. But with a solid U.S. economy that has boosted import demand, the trade war and a strong dollar, the gap has widened since his election in 2016.