US DATA
The final September trade numbers confirms the US posted the largest monthly trade deficit since April 2022, at -$84.4B. This figure was within a mere $400M of expectations, with the advance goods trade report for the month already having pointed the way to a large shortfall (-$108.9B goods, offset by +$24.6B services). As a percentage of GDP, the 3.2% goods and services deficit is the biggest since October 2022, driven entirely by goods with the services balance at 1.0% of GDP for the past two years.
- As we noted after the advance release, the climbing trade deficit is not in itself an unhealthy development for the US economy: it's been largely driven by higher capital goods import volumes, indicating healthy investment, with consumer goods beginning to pick back up as well amid strong domestic demand.
- Imports of goods and services - and capital goods specifically - were the highest on record in September. Notably, the Census Bureau points out that "The September deficit with Mexico ($15.8 billion) was the highest on record" and "imports from China ($43.1 billion) were the highest since October 2022 ($44.7 billion)."
- Those trade dynamics could change quickly depending on the results of the Nov 5 election: per MNI's Political Risk team (policy preview here), ex-President and Republican candidate Trump's platform on trade "is an expanded tariff regime that would upend decades of Washington orthodoxy by raising a 10-20% across-the-board tariff on all imports into the United States and an additional 60% tariff on all goods imported from China."
- Re his opponent, Democrat and VP Harris, "although she has said little publicly about how she would use tariffs to influence manufacturing, Harris is likely to tack quite closely with Biden’s more modest tariff plan, targeting Chinese-made electric vehicles, metals, computer chips, and other goods the administration relates to national security. A spokesperson said Harris would “employ targeted and strategic tariffs to support American workers.”
315 words