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The US current account deficit unexpectedly narrowed in the fourth quarter.

The current account measures the country’s trade balance in goods and services and in the fourth quarter, the deficit shrunk to $112.4bn, the Commerce Department said on Tuesday. That was better than a deficit of $129bn that the market was expecting and compared to a shortfall of $116bn in the third quarter.

The deficit represents 2.4 per cent of GDP, compared with 2.5 per cent in the previous quarter.

However, the deficit for 2016 swelled to $481.2bn or 2.6 per cent of GDP, compared with $463bn the previous year.

The numbers come as US president Donald Trump has pledged to impose a border tax that could impact American companies that manufacture abroad.

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