US trade deficit widens sharply in December; goods trade gap highest on record in 2025
By: Lucia Mutikani (Reuters)
INFLATION!
The United States is importing more now than before Trump imposed tariffs. So, the tariffs have only contributed to inflation.
S E E D E D C O N T E N T
WASHINGTON, Feb 19 (Reuters) - The U.S. trade deficit widened sharply in December amid a surge in imports, and the goods shortfall in 2025 was the highest on record despite President Donald Trump's tariffs on foreign manufactured merchandise.
The trade gap ballooned 32.6% to $70.3 billion, the Commerce Department's Bureau of Economic Analysis and Census Bureau said on Thursday. Economists polled by Reuters forecast the trade deficit would contract to $55.5 billion. The trade deficit narrowed 0.2% to $901.5 billion in 2025. The goods trade gap widened 2.1% to an all-time high of $1.24 trillion.
Trump last year unleashed a barrage of tariffs against trading partners with the aim, among other things, to address trade imbalances and protect U.S. industries. But the punitive duties have not yielded a manufacturing renaissance, with factory employment declining by 83,000 jobs from January 2025 through January 2026.
The report was delayed because of last year's government shutdown. Imports increased 3.6% to $357.6 billion in December. Goods imports surged 3.8% to $280.2 billion, boosted by a $7.0 billion increase in industrial supplies and materials, mostly non-monetary gold, copper and crude oil.
Capital goods imports increased $5.6 billion, lifted by computer accessories and telecommunications equipment. That rise is likely related to the construction of data centers to support artificial intelligence.
But consumer goods imports fell, pulled down by pharmaceutical preparations. There have been large swings in imports of pharmaceutical preparations.
Exports fell 1.7% to $287.3 billion in December. Goods exports dropped 2.9% to $180.8 billion, weighed down by an $8.7 billion decline in industrial supplies and materials, mostly non-monetary gold. Exports of other goods fell.
But capital goods exports increased, boosted by semiconductors. There were increases in exports of consumer goods, including pharmaceutical preparations. Exports of goods increased 5.7% to $2.20 trillion in 2025.
The goods trade deficit widened 18.8% to $99.3 billion. Imports of services increased $2.0 billion to $77.4 billion in December amid gains in transport and travel services. Exports of services increased $0.5 billion to $106.5 billion.
The larger-than-expected trade deficit could prompt economists to lower their gross domestic product growth estimates for the fourth quarter. The BEA is scheduled to publish its delayed advance fourth-quarter GDP estimate on Friday. The economy likely grew at a 3.0% annualized rate last quarter after expanding at a 4.4% pace in the July-September quarter, a Reuters survey of economists showed.
(Reporting by Lucia Mutikani; Editing by Paul Simao)
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Trump's tariffs have been a gold-plated hoax.
“Ha! You knew I was a snake when you picked me up.” - Donald J. Trump
"Yeah, but! I thought you liked me!"
Every economist knew it and said as much. Too bad Trump doesn't listen to anyone except those voices in his head.
Trump abused tariffs. They are a tool to temporarily help domestic industries compete with cheaper international suppliers. They are on occasion used to reciprocate. Trump uses tariffs as a tool for extortion.
Trump found his hammer and now every problem looks like a nail to him. He is a buffoon. Just amazing that so many think he is competent.
Tariffs raise prices on the affected goods. There is no getting around this. Apparently, there are still many gullible individuals who believe Trump's claim that tariffs are paid by the foreign trade partner.
I am pleased that our economy (and the stock market) has held up as well as it has in spite of Trump's incompetent, irrational words and deeds. Seems investors have set aside Trump's irrational behavior; unexpected but happily accepted.
That glosses over the fact that the affected goods are imports. The whole idea is to transition away from imports and toward domestically produced goods. But it will require a whole lot more than a market signal to encourage investment in domestic manufacturing.
Those metrics are measuring the supply-side services economy. A services economy does not generate wealth. A services economy is very good at concentrating money and the supply-side metrics are measuring how well the top of the economy is performing.
Our economy is very good at creating apps for everything which sucks money out of the economy and transfers it to a stagnant pool of money concentrated at the top of the economy. That distorted view is not providing an adequate description of the health of the economy.
That is never going to happen. If imported goods are the same quality but at a lower price, they are going to prevail. Instead of trying to compete on producing items better suited for low-cost labor we should be producing items that require sophisticated technology. The USA labor costs are not going to suddenly drop to competitive levels
Of course it does.
Inflation, CPI, interest rates (primarily for mortgages), wages, and unemployment are the key factors for the average citizen. Wages are below what we need given the current CPI. Interest rates are still too high.
But even so, the economic measures do not (yet) translate into a poor economy. Although Trump is no help in this regard, one can only hope that the economy will at least remain stable until he is gone.
I don't think so. I think if that was really the goal we would have seen a more measured, systematic implementation of them
I think Trump's primary use of tariffs is as a lever to try and negotiate better trade deals. They've also generated a reasonably sizeable chunk of revenue for the treasury.
But the underlying issue here is Trump's very (often overly) aggressive "America first" emphasis that seems to drive many of his initiatives. The US has a long history of using trade policy as a strategic tool to foster economic development and regional stability in other countries. Places like the Philippines, Pakistan, Malaysia and many others have had free access to US markets while setting tariffs on US goods we try to export.
It's a form of soft subsidy, where we can help those countries at the expense of US businesses and consumers without formally sending them money.
It's absolutely something his supporters would hate even more if they understood it fully, so Trump is shutting that down until he's either overruled in court or out of office.
You look at places like Wall Street or The City of London or Singapore or Silicon Valley and wonder how that possibly requires explanation.
Where's my bonus check on all that money that was made from the tariffs?
Probably paying for all those extra ICE Agents.
Really? Did you know that they signed up for a 50K bonus but they only get it a little at a time. They have to put in a 5 year commitment. AND if they don't adhere to that contract they have to pay back every penny of the bonus money they rec'd.
The "best and the brightest" forgot to read the fine print.
I read several of them have been arrested for real crimes. I guess those MESA candidates won't be getting any bonuses.
I'm really not surprised. The ones they have on the street never looked like law abiding citizens to me. They're Mango Mussolini's black shirts