US Trade Deficit Narrows Slightly in 2025 Amidst Tariff Volatility
Washington D.C. – The U.S. Trade deficit edged down to $901.5 billion in 2025, a modest decrease from $904 billion in 2024, according to data released by the Commerce Department on Thursday, February 19, 2026. The year was marked by significant volatility stemming from President Donald Trump’s implementation of double-digit tariffs on imports from most countries.
December Trade Data
In December 2025, the goods and services trade gap widened to $70.3 billion, up from a revised $53.0 billion in November. This increase reflected a 3.6% rise in imports, including computer accessories and motor vehicles, while exports declined by 1.7%, largely due to fewer gold shipments. U.S. Bureau of Economic Analysis
Goods vs. Services
The December increase in the overall deficit was driven by a $15.7 billion increase in the goods deficit, reaching $99.3 billion, and a $1.6 billion decrease in the services surplus, which fell to $29.0 billion. U.S. Bureau of Economic Analysis
Impact on GDP
Economists estimate that trade will provide a minimal boost, or potentially a drag, on fourth-quarter gross domestic product (GDP), which is scheduled for release on Friday. The Federal Reserve Bank of Atlanta’s GDPNow forecast predicts net exports will barely contribute to fourth-quarter growth, currently estimated at 3%.
Shifting Trade Patterns
While the overall trade deficit with China narrowed significantly to approximately $202 billion – the smallest gap in over 20 years – trade was diverted to other countries. The goods gap with Taiwan doubled to $146.8 billion, and the shortfall with Vietnam similarly widened to a record high. Associated Press, New York Post
Record Imports of Tech Goods
The U.S. Deficit in goods widened by 2% to a record $1.24 trillion in 2025, fueled by increased imports of computer chips and other technology products from Taiwan to support investments in artificial intelligence. Associated Press, New York Post
Other Trade Relationships
The trade deficit with Mexico increased to nearly $197 billion, while the deficit with Canada narrowed by 26% to $46 billion. New York Post
Looking Ahead
The impact of President Trump’s tariff policies and the potential for a Supreme Court ruling on his tariff authority remain key factors influencing the future direction of U.S. Trade. Economists are closely watching how trade patterns will evolve as companies adjust to the changing global landscape.