(MENAFN- Live Mint) The United States trade deficit - the amount by which the value of a nation's imports exceeds its exports - contracted to $59.6 billion in August, reported Forbes citing figures released by the Bureau of Economic Analysis (BEA) on Wednesday.

The latest data represents the narrowest gap as compared to $58.3 billion in October 2023. It marks a 24 per cent fall from the $78.2 billion deficit seen in July.

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The notable contraction was primarily driven by a 5.1 per cent decline in imports, the largest dip in four months, while exports rose marginally 0.1 per cent, the BEA reported.

Tariffs and Economic Impact

The data arrives in the context of the far-reaching tariffs announced by President Donald Trump in April on 'Liberation Day' and subsequently expanded in August. These actions raised the effective tariff rate imposed by the US to 18 per cent.

The tariffs implementation was twice paused until 1 August. Trump signed an executive order setting revised rates for 68 countries and the European Union, with some of his original levies adjusted following agreements with nine countries.

The Atlanta Federal Reserve currently anticipates that the US Gross Domestic Product (GDP) will increase by 4.2 per cent in the third quarter, with exports predicted to contribute up to 0.78 percentage points of that growth. This follows a 3 per cent rise in GDP during the second quarter, which exceeded a Dow Jones consensus of 2.3 per cent, a period where both exports and imports fell, as reported by Forbes.

Data Delays and Inflation

The report on the August trade deficit was delayed by over a month due to the recent government shutdown, which concluded last week. The BEA has yet to confirm a release date for the September data. Similarly, the Census Bureau stated on Wednesday it would release September's retail sales and durable goods orders data on 25 November.

Investors and the Federal Reserve have been closely monitoring economic indicators for evidence that Mr. Trump's tariffs have disrupted markets, including concerns that the duties might raise inflation. Although prices have been rising steadily in recent months, the government shutdown has postponed key economic reports, meaning it is not immediately clear whether the inflation rate has increased since September.

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The Bureau of Labour Statistics (BLS), which resumed work for some of its furloughed personnel during the shutdown, most recently reported that consumer prices rose annually by 3 per cent in September.

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