The U.S. trade deficit climbed in October from its lowest monthly level in nearly three years. Imports of consumer goods such as medicine, cell phones and clothing increased, while exports of soybeans, gold and artwork tumbled, which fueled the monthly widening of the trade gap.
The Commerce Department said Tuesday that the deficit rose to $42.6 billion in October, up 17.8 percent from September. The $36.2 billion trade deficit in September was the lowest since December 2013.
Reducing the trade deficit has become a primary focus of President-elect Donald Trump. Trump cites the trade imbalance as evidence that the United States has signed misguided trade agreements that have hurt U.S. economic growth and cost jobs.
In the wake of an agreement last week to keep 800 jobs at the Carrier furnace factory in Indianapolis from going to Mexico, Trump has promised to lower corporate-tax rates to preserve factory jobs inside the United States, while threatening harsh penalties for companies that produce goods overseas to save on labor costs. This week, Trump warned that he will impose a 35-percent tariff on the goods imported by companies that outsource production.
But such moves on trade might do little to boost manufacturing employment.
Greg Hayes, the chief executive of Carrier’s parent company, United Technologies, said on CNBC Monday that the $16 million investment in the Indianapolis plant as part of the decision to limit outsourcing would ultimately increase automation and “what that ultimately means is there will be fewer jobs.”
So far this year, the trade deficit is running 2.1 percent below its 2015 levels. The United States has been exporting more food but fewer industrial supplies, oilfield equipment, autos and consumer goods. But the country has also cut back on imports of steel, oil, aircraft and computer accessories, among other goods, leading to a narrowing of the overall trade deficit.
The goods trade deficit with China contracted to $31.1 billion in October and is running 6.2 percent below last year’s level, although it remains the leading contributor to America’s trade gap.
The deficit with the European Union rose 29.2 percent to $13.1 billion. The imbalance with Mexico climbed 18.1 percent to $6.2 billion.