President Donald rump’s tariffs have caused wild swings in goods imports this year
[WASHINGTON] The US current account deficit contracted by the most on record in the second quarter as a flood of imports subsided.
The Commerce Department’s Bureau of Economic Analysis said on Tuesday (Sep 23) the current account deficit, which measures the flow of goods, services and investments into and out of the country, decreased by a record US$188.5 billion, or 42.9 per cent, to US$251.3 billion, reversing the prior month’s jump.
Data for the first quarter was revised to show the gap at US$439.8 billion, still an all-time high, instead of US$450.2 billion as previously reported.
Economists polled by Reuters had forecast the current account deficit declining to US$256.8 billion last quarter.
The deficit represented 3.3 per cent of gross domestic product, the smallest share since the third quarter of 2023, down from 5.9 per cent in the January-March quarter. It peaked at 6.3 per cent in the third quarter of 2006.
President Donald Trump’s tariffs have caused wild swings in goods imports this year, undercutting gross domestic product in the first quarter before boosting growth in the April-June quarter. Trump’s unpredictable economic, trade and security policies have also spurred questions over whether the dollar, which accounts for 58 per cent of the world’s reserves, can remain at the centre of the global monetary system.
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Imports of goods declined by a record US$184.5 billion to US$820.2 billion last quarter. There were decreases in imports of non monetary gold, consumer goods as well as industrial supplies and materials, which include crude oil.
Imports of services rose US$2.8 billion to US$222.0 billion, lifted by increases in technical, trade-related and other business services. There were also increases in telecommunications, computer and information services, partially offset by a drop in transport services.
Goods exports jumped US$11.3 billion to US$550.2 billion, boosted by increases in non monetary gold shipments. Exports of industrial supplies and materials fell.
SEE ALSO
Exports of services advanced US$2.1 billion to US$301.6 billion, driven by increases in financial services and in charges for the use of intellectual property. But exports of government goods and services fell. The goods trade deficit narrowed to US$270 billion, the smallest since the fourth quarter of 2023, from US$465.8 billion in the first quarter.
Receipts of primary income increased US$17.8 billion to US$376.1 billion last quarter. Payments of primary income rose U$22.8 billion to US$383.8 billion. Receipts of secondary income decreased US$2.6 billion to US$45.9 billion, amid a decline in private transfers. Payments of secondary income fell US$1.0 billion to US$99.2 billion as general government transfers decreased. REUTERS
