US trade deficit narrows to $41.5 billion

Associated Press Modified: November 8, 2012 at 10:01 am •  Published: November 8, 2012
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Europe's debt crisis and slower global growth in emerging markets had weakened demand for U.S. goods overseas in the previous months. That subtracted from economic growth in the third quarter.

Exports to the 27-nation European Union were unchanged in September from August. Exports to Latin America grew 4.2 percent, although exports to Brazil declined. Brazil is South America's biggest economy.

So far this year, the U.S. deficit is running at an annual rate of $554 billion, slightly below last year's $559.9 billion imbalance.

The U.S. deficit with China increased to $29.1 billion in September. It is running 6.8 percent ahead of last year's record pace. America's deficit with China last year was the highest imbalance ever recorded with a single country.

The widening trade gap with China has heightened trade tensions between the two countries. Many have complained that China's trade practices are unfair. American manufacturers say China has kept the yuan undervalued against the U.S. dollar. A lower valued yuan makes Chinese goods cheaper for U.S. consumers and American products more expensive in China.

The Obama administration has lobbied China to move more quickly to allow the yuan to rise in value. But it has refused to cite China as a currency manipulator. That designation would require negotiations between the two nations and could lead to the United States filing a trade case against China before the World Trade Organization.