The Boeing Airplanes factory in Everett, Washington. The trade gap between US imports and exports shrank to $63.9 billion in September from $67 billion in August. AFP
The Boeing Airplanes factory in Everett, Washington. The trade gap between US imports and exports shrank to $63.9 billion in September from $67 billion in August. AFP
The Boeing Airplanes factory in Everett, Washington. The trade gap between US imports and exports shrank to $63.9 billion in September from $67 billion in August. AFP
The Boeing Airplanes factory in Everett, Washington. The trade gap between US imports and exports shrank to $63.9 billion in September from $67 billion in August. AFP

Economy

US trade deficit falls to $63.9bn in September

Gap narrows for the first time in three months as exports jumped and import growth slowed

Bloomberg

November 04, 2020

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  • Arabic

The US trade deficit narrowed for the first time in three months as exports jumped and import growth slowed, though overall transactions remained well below pre-pandemic levels.

The gap in goods and services shrank to $63.9 billion in September from $67bn in August, according to US Commerce Department data released on Wednesday. The figure matched the median estimate in a Bloomberg survey of economists.

Total imports increased 0.5 per cent to $240.2bn, while exports advanced 2.6 per cent to $176.4bn. The nation’s surplus in services was little changed, while the merchandise trade deficit narrowed. Combined, the value of US exports and imports increased to $417bn, the highest since March, still down from $469bn at the end of 2019.

The narrowing of the deficit reflects a two-year high in soybean exports, as well as overseas shipments capital goods such as telecommunications equipment, while imports of consumer goods declined. Even with the monthly change, the gap is much wider than at the onset of the pandemic, reflecting elevated imports to meet consumer demand and a plunge in spending by international visitors, which is reflected in lower travel exports.

Countries across Europe have reinstated stay-at-home measures in the last week, which could constrain US exports in the coming months.

The narrowing of the overall deficit can be partly attributed to China, where the merchandise gap shrank to $24.3bn, the smallest since March, as exports rose and imports fell.

With results of Tuesday’s election up in the air, the outlook for trade policy is uncertain. Former Vice President Joe Biden is keen to reset trade relations with allies such as the European Union after Trump’s duties and hard-line stance disrupted supply chains and increased costs for many US businesses. President Donald Trump, on the other hand, has vowed to end US reliance on China in a continuation of his “America First” trade policy.

While you're here
Ten tax points to be aware of in 2026

1. Domestic VAT refund amendments: request your refund within five years

If a business does not apply for the refund on time, they lose their credit.

2. E-invoicing in the UAE

Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption. 

3. More tax audits

Tax authorities are increasingly using data already available across multiple filings to identify audit risks. 

4. More beneficial VAT and excise tax penalty regime

Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.

5. Greater emphasis on statutory audit

There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.

6. Further transfer pricing enforcement

Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes. 

7. Limited time periods for audits

Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion. 

8. Pillar 2 implementation 

Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.

9. Reduced compliance obligations for imported goods and services

Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations. 

10. Substance and CbC reporting focus

Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity. 

Contributed by Thomas Vanhee and Hend Rashwan, Aurifer

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