The U.S. trade deficit contracted sharply in October as imports declined by the most since late 2022, potentially positioning trade to contribute to economic growth in the fourth quarter.

The trade gap narrowed 11.9% to $73.8 billion from a revised $83.8 billion in September, the Commerce Department's Bureau of Economic Analysis said on Thursday. Economists polled by Reuters had forecast the trade deficit easing to $75.0 billion from the previously reported $84.4 billion in September.

Imports dropped 4.0%, the biggest decrease since November 2022, to $339.6 billion. Goods imports tumbled 5.5% to $269.3 billion. Businesses worried about President-elect Donald Trump's threats to raise tariffs on foreign goods could try to front load imports, which would reverse October's drop and ensure trade remained a drag on gross domestic product.

Trump has said he would impose a 25% tariff on all products from Mexico and Canada and an additional 10% tariff on goods from China on his first day in office.

Imports of capital goods decreased $7.5 billion, weighed down by declines in imports of computers and semiconductors. Imports of industrial supplies and materials, which include petroleum, fell $3.3 billion. Petroleum imports at $17.2 billion were the lowest since June 2021.

There were also decreases in imports of consumer goods, mostly pharmaceutical preparations. Imports of automotive vehicles, parts and engines also fell.

Imports of services rose $1.4 billion to a record high $70.2 billion, boosted by travel, charges for the use of intellectual property, transport, insurance and other business services.

Exports fell 1.6% to $265.7 billion. Goods exports dropped 3.0% to $170.7 billion, led by a $3.9 billion decrease in capital goods exports. Shipments of automotive vehicles, parts and engines also fell as did industrial supplies and materials, and consumer goods.

Exports of services increased $1.0 billion to an all-time high of $95.1 billion. They were lifted by travel, other business services, maintenance and repair, transport and charges for the use of intellectual property. Exports of telecommunications, computer and information services also rose.

The goods trade deficit narrowed 9.5% to $98.7 billion. It decreased 7.3% to $92.4 billion when adjusted for inflation.

Trade subtracted 0.57 percentage point from GDP in the July-September quarter. It has been a drag on economic growth for three straight quarters. The economy grew at a 2.8% annualized rate in the July-September quarter.