The US trade deficit experienced a significant contraction in October, according to data released by the Commerce Department’s Bureau of Economic Analysis and Census Bureau. The deficit narrowed by 39.0 per cent to $US29.4 billion ($44 billion), marking the lowest level since June 2009. This steep decline was primarily driven by a tumble in goods imports, a consequence of President Donald Trump’s extensive tariff increases.
The reduction in goods imports also signals a potential softening of domestic demand. Imports of consumer goods reached their lowest point since June 2020, with a notable decrease in pharmaceutical preparations. While overall exports, including goods, reached a record high, this increase was largely attributable to exports of non-monetary gold and other precious metals. The goods trade deficit itself compressed by 24.5 per cent to $US59.1 billion, the lowest since March 2016.
Trade has contributed positively to GDP growth in the second and third quarters of 2025, and should this trend continue, it could again add to gross domestic product in the fourth quarter. The Atlanta Fed has subsequently boosted its fourth-quarter GDP growth estimate to a rate of 5.4 per cent from a previous 2.7 per cent.
“The 2026 outlook for the economy is looking better than ever for now,” said Christopher Rupkey, chief economist at FWDBONDS. “The only thing missing is that American workers seem to be left by the wayside, with companies continuing to keep costs down by limiting the hiring of additional workers.”
