US Trade Gap Widens

Date: October 07, 2015

Trade Deficit Rose 15.6% In August On Weaker Global Demand

According to the latest Commerce Department monthly trade data, in August, the US trade deficit grew by 15.6%, or $6.5 billion, to a total of $48.3 billion. Exports fell by $3.7 billion from July to a total of $185.1 billion in August, while imports rose by $2.8 billion to $233.4 billion for the month. For the year-to-date, the goods and services deficit rose to a total of $17.6 billion, or 5.2%, from August 2014. During that 12-month period, exports fell by 3.8%, or $58.9 billion, and imports fell by 2.2%, or $41.3 billion. Sales of US goods and services abroad were at their lowest level since October 2012, with exports to Mexico falling by $1.5 billion for the month and exports to the EU falling by $500 million, Reuters reported. There were a few explanations for August’s results, Reuters said. July saw a smaller trade deficit than normal, likely making the August data appear like more of a gap than it might otherwise. Additionally, imports were probably only temporarily boosted due to imports of cellphones prior to the release of the new iPhone models. Export declines were also partially due to expectations of a pending boost in US interest rates that have led to a strengthening US dollar, making US exports less competitive on the global market, Reuters added.

What This Means For Small Businesses

Tuesday’s Department of Commerce data is mixed news for small businesses. Although the trade deficit grew in August, a negative for businesses looking to sell products abroad, the US dollar continues to strengthen, meaning the costs of ordering supplies for small businesses from abroad is lessening. Ultimately, as Reuters reported, Capital Economics economist Steve Murphy suggested, “Trade will remain a drag on the real economy until well into next year.” This means small businesses may see some difficulties in marketing their goods overseas.

Additional Reading

MarketWatch and the Business Journals’ Washington bureau also reported on Tuesday’s trade data.

Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.

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