Overall Trade Gap Edges Lower
The U.S. trade deficit narrowed slightly in 2025, even as President Donald Trump continued aggressive tariff policies aimed at reshaping global trade.
According to new data from the U.S. Department of Commerce, the overall gap between what the United States exports and imports fell to just over 901 billion dollars, down from 904 billion dollars in 2024. Even with the modest decline, it marked the third largest deficit ever recorded.
Exports climbed 6 percent last year, while imports rose nearly 5 percent. The figures suggest steady trade activity despite ongoing policy shifts and global tensions.
Goods Deficit Reaches New High
While the total deficit dipped, the gap in goods trade moved in the opposite direction. The goods deficit widened 2 percent to a record 1.24 trillion dollars.
Much of that increase came from higher imports of advanced technology products. U.S. companies ramped up purchases of computer chips and related components from Taiwan to support large investments in artificial intelligence and data infrastructure.
Trump’s tariffs have largely focused on goods rather than services. Still, the record goods gap shows that import taxes alone have not reversed long standing trade imbalances.
Shifting Trade Patterns With China and Asia
Trade flows continued to shift away from China. The goods deficit with China dropped nearly 32 percent to 202 billion dollars in 2025. Both exports to and imports from China declined amid ongoing tensions.
However, trade did not disappear. Instead, it moved to other Asian economies. The deficit with Taiwan doubled to 147 billion dollars. Meanwhile, the gap with Vietnam jumped 44 percent to 178 billion dollars.
Economist Chad Bown of the Peterson Institute for International Economics said these widening gaps could draw fresh attention if policymakers focus more heavily on trade numbers in the coming year.
North America and Services Trade
In North America, the U.S. goods deficit with Mexico grew to nearly 197 billion dollars, up from 172 billion dollars the year before. At the same time, the deficit with Canada fell sharply, dropping 26 percent to 46 billion dollars.
The United States is currently negotiating updates to its trade agreement with Mexico and Canada, originally reached during Trump’s first term.
Services trade told a different story. The U.S. posted a larger surplus in services such as finance, travel, and tourism. That surplus increased to 339 billion dollars, up from 312 billion dollars in 2024.
Impact of Tariffs on Prices and Industry
The trade deficit surged early in the year as companies rushed to import goods before new tariffs took effect. It then narrowed through much of the remaining months.
Tariffs are paid by U.S. importers and often passed on to consumers in the form of higher prices. Even so, inflation has not risen as sharply as many economists initially feared.
Trump has argued that tariffs protect American industries, encourage domestic manufacturing, and generate revenue for the federal government. Whether they will significantly reduce the trade imbalance remains a key question heading into the next year.
