(What’s Left of) Our Economy: U.S. Trade Deficit Results Keep Confounding Tariff Critics
What's the administration thinking here?
Despite the big jump in the December overall U.S. trade deficit reported this morning by the Census Bureau, the narrative of the Trump 2.0 tariffs helping to narrow the gap remained intact – and handily so.
The combined goods and services shortfall did soar by 32.55 percent on month in December, from $53.04 billion to $70.31 billion – the highest total since July’s $73.94 billion.
But that November figure represents a big (6.65 percent) downgrade from the initially reported $56.83 billion.
In addition, the total trade deficit edged down year-on-year by 0.23 percent, from $903.52 billion to $901.47 billion. This shrinkage, moreover, happened although 2025’s final economic growth rate (slated to be released preliminarily tomorrow) is virtually certain to exceed 2024’s. Most economists believe that the opposite usually takes place – when growth speeds up, trade deficits rise because the economy is buying more both from domestic and foreign suppliers.
And the annual deficit improvement last year came despite a huge run up in the shortfall during the first quarter, as importers rushed to bring in imports to beat the expected Trump tariffs.
During Trump 2.0 proper, the trade results look even better. From last February (the first full month of the president’s second term) through December, the overall deficit totaled $773.13 billion. That was 7.57 percent below the total of the last ten months of the pre-tariff-y Biden administration ($836.46 billion).
Much better yet, on a post-Liberation Day basis (April through December)i, the combined goods and services deficit has plummeted by fully 34.03 percent – from $703.76 billion in 2024 to $464.30 billion last year. And post-Liberation Day economic growth last year was especially fast.
The goods deficit worsened by 18.76 percent sequentially in December, from $83.64 billion to $99.33 billion. That level was the highest July’s $102.55 billion. But the November total was also revised down – by a significant 3.75 percent, from $86.90 billion.
On an annual basis, the goods deficit hit a new record in 2025 of $1.24094 trillion. But that was up just 2.10 percent from the 2024 level – much more slowly than the 14.94 percent pace the year before.
The services surplus shrank in December by 5.96 percent, from an upwardly revised $30.60 billion to $29.02 billion – its smallest since last July’s $28.61 billion. But the full-year 2025 services surplus of $339.47 billion was another new record. And its 8.85 percent growth was only slightly slower than 2024’s 10.09 percent.
Similar trends can be seen for exports and imports. Overall exports dipped by 1.71 percent sequentially in December, from an upwardly revised $292.29 billion to $287.29 billion. The December total was the lowest since August’s $283.74 billion and the second straight decline.
But year-on-year, combined goods and services exports rose by 6.18 percent in 2025, to hit an all-time high of $3.43234 trillion. That’s faster than their 4.53 percent annual improvement in 2024, confirming the Trump administration’s judgment that few if any foreign countries would retaliate against his tariffs because of superior U.S. …
What's the administration thinking here?
Despite the big jump in the December overall U.S. trade deficit reported this morning by the Census Bureau, the narrative of the Trump 2.0 tariffs helping to narrow the gap remained intact – and handily so.
The combined goods and services shortfall did soar by 32.55 percent on month in December, from $53.04 billion to $70.31 billion – the highest total since July’s $73.94 billion.
But that November figure represents a big (6.65 percent) downgrade from the initially reported $56.83 billion.
In addition, the total trade deficit edged down year-on-year by 0.23 percent, from $903.52 billion to $901.47 billion. This shrinkage, moreover, happened although 2025’s final economic growth rate (slated to be released preliminarily tomorrow) is virtually certain to exceed 2024’s. Most economists believe that the opposite usually takes place – when growth speeds up, trade deficits rise because the economy is buying more both from domestic and foreign suppliers.
And the annual deficit improvement last year came despite a huge run up in the shortfall during the first quarter, as importers rushed to bring in imports to beat the expected Trump tariffs.
During Trump 2.0 proper, the trade results look even better. From last February (the first full month of the president’s second term) through December, the overall deficit totaled $773.13 billion. That was 7.57 percent below the total of the last ten months of the pre-tariff-y Biden administration ($836.46 billion).
Much better yet, on a post-Liberation Day basis (April through December)i, the combined goods and services deficit has plummeted by fully 34.03 percent – from $703.76 billion in 2024 to $464.30 billion last year. And post-Liberation Day economic growth last year was especially fast.
The goods deficit worsened by 18.76 percent sequentially in December, from $83.64 billion to $99.33 billion. That level was the highest July’s $102.55 billion. But the November total was also revised down – by a significant 3.75 percent, from $86.90 billion.
On an annual basis, the goods deficit hit a new record in 2025 of $1.24094 trillion. But that was up just 2.10 percent from the 2024 level – much more slowly than the 14.94 percent pace the year before.
The services surplus shrank in December by 5.96 percent, from an upwardly revised $30.60 billion to $29.02 billion – its smallest since last July’s $28.61 billion. But the full-year 2025 services surplus of $339.47 billion was another new record. And its 8.85 percent growth was only slightly slower than 2024’s 10.09 percent.
Similar trends can be seen for exports and imports. Overall exports dipped by 1.71 percent sequentially in December, from an upwardly revised $292.29 billion to $287.29 billion. The December total was the lowest since August’s $283.74 billion and the second straight decline.
But year-on-year, combined goods and services exports rose by 6.18 percent in 2025, to hit an all-time high of $3.43234 trillion. That’s faster than their 4.53 percent annual improvement in 2024, confirming the Trump administration’s judgment that few if any foreign countries would retaliate against his tariffs because of superior U.S. …
(What’s Left of) Our Economy: U.S. Trade Deficit Results Keep Confounding Tariff Critics
What's the administration thinking here?
Despite the big jump in the December overall U.S. trade deficit reported this morning by the Census Bureau, the narrative of the Trump 2.0 tariffs helping to narrow the gap remained intact – and handily so.
The combined goods and services shortfall did soar by 32.55 percent on month in December, from $53.04 billion to $70.31 billion – the highest total since July’s $73.94 billion.
But that November figure represents a big (6.65 percent) downgrade from the initially reported $56.83 billion.
In addition, the total trade deficit edged down year-on-year by 0.23 percent, from $903.52 billion to $901.47 billion. This shrinkage, moreover, happened although 2025’s final economic growth rate (slated to be released preliminarily tomorrow) is virtually certain to exceed 2024’s. Most economists believe that the opposite usually takes place – when growth speeds up, trade deficits rise because the economy is buying more both from domestic and foreign suppliers.
And the annual deficit improvement last year came despite a huge run up in the shortfall during the first quarter, as importers rushed to bring in imports to beat the expected Trump tariffs.
During Trump 2.0 proper, the trade results look even better. From last February (the first full month of the president’s second term) through December, the overall deficit totaled $773.13 billion. That was 7.57 percent below the total of the last ten months of the pre-tariff-y Biden administration ($836.46 billion).
Much better yet, on a post-Liberation Day basis (April through December)i, the combined goods and services deficit has plummeted by fully 34.03 percent – from $703.76 billion in 2024 to $464.30 billion last year. And post-Liberation Day economic growth last year was especially fast.
The goods deficit worsened by 18.76 percent sequentially in December, from $83.64 billion to $99.33 billion. That level was the highest July’s $102.55 billion. But the November total was also revised down – by a significant 3.75 percent, from $86.90 billion.
On an annual basis, the goods deficit hit a new record in 2025 of $1.24094 trillion. But that was up just 2.10 percent from the 2024 level – much more slowly than the 14.94 percent pace the year before.
The services surplus shrank in December by 5.96 percent, from an upwardly revised $30.60 billion to $29.02 billion – its smallest since last July’s $28.61 billion. But the full-year 2025 services surplus of $339.47 billion was another new record. And its 8.85 percent growth was only slightly slower than 2024’s 10.09 percent.
Similar trends can be seen for exports and imports. Overall exports dipped by 1.71 percent sequentially in December, from an upwardly revised $292.29 billion to $287.29 billion. The December total was the lowest since August’s $283.74 billion and the second straight decline.
But year-on-year, combined goods and services exports rose by 6.18 percent in 2025, to hit an all-time high of $3.43234 trillion. That’s faster than their 4.53 percent annual improvement in 2024, confirming the Trump administration’s judgment that few if any foreign countries would retaliate against his tariffs because of superior U.S. …
0 Comments
0 Shares
32 Views
0 Reviews
