US Trade Deficit Narrowed Amid Trump's Tariff Turbulence

The year 2025 saw a modest decline in the US trade deficit, with President Donald Trump’s aggressive tariff strategies reshaping global commerce. The Commerce Department reported a narrowing gap of USD 901 billion, compared to USD 904 billion in 2024.

Despite upending trade dynamics, exports increased by 6% while imports grew by nearly 5%. Earlier in the year, a surge in imports was noted as companies rushed to bring in foreign goods before tariffs took effect, before the deficit contracted throughout the year.

Trump's tariffs, designed to protect domestic industries and boost the US Treasury, acted as a tax on imports, often resulting in higher prices for American consumers but with less effect on inflation than anticipated.