The US trade deficit narrowed sharply in October to its lowest level since mid-2009, as imports declined, suggesting that trade could once again contribute to economic growth in the fourth quarter if this trend continues.
The Bureau of Economic Analysis and the Census Bureau reported on Thursday that the trade deficit shrank by 39.0% to $29.4 billion, marking the lowest figure since June 2009.
Economists surveyed by Reuters had previously forecast the deficit would widen to $58.9 billion. The release of this report was delayed due to a 43-day government shutdown.
Imports fell by 3.2% to $331.4 billion. Notably, goods imports plunged 4.5% to $255.0 billion, the lowest level since June 2023. The decline in imports may be linked to the broad tariffs implemented by President Trump, while also indicating softening domestic demand.
Imports of industrial supplies decreased by $2.7 billion, dropping to the lowest level since February 2021, primarily due to a $1.4 billion reduction in non-monetary gold imports, which are excluded from GDP calculations.
Consumer goods imports fell by $14.0 billion to the lowest point since June 2020, largely dragged down by a $14.3 billion decrease in pharmaceutical preparations. Conversely, capital goods imports increased by $6.8 billion, boosted by computer accessories, communications equipment, and computers, potentially linked to investments in artificial intelligence.
Exports grew by 2.6% to a record $302.0 billion. Goods exports jumped 3.8% to $195.9 billion, also a historic high, bolstered by exports of non-monetary gold and other precious metals. However, exports of consumer goods declined, primarily pharmaceuticals, while exports of other goods also decreased.
The goods trade deficit narrowed by 24.5% to $59.1 billion, the smallest since March 2016. Both services exports and imports reached record levels.
Under Trump's protectionist trade policies, the trade deficit has experienced significant volatility. Trade contributed to GDP growth in the second and third quarters of 2025.
The Atlanta Fed currently projects fourth-quarter GDP growth at a 2.7% annualized rate, following economic growth of 4.3% in the third quarter.
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