US trade deficit declined in 2025 — but America imported a record amount despite Trump tariffs

• The goods trade deficit with China plunged 32% to $202 billion, but trade shifted to other countries with Taiwan's deficit doubling to $147 billion and Vietnam's jumping 44% to $178 billion
• US imports rose nearly 5% and exports increased 6% in 2025, with the trade gap surging January-March as companies front-loaded imports ahead of Trump's tariffs
• The US ran a larger services trade surplus of $339 billion in 2025, up from $312 billion in 2024, while the goods deficit with Mexico widened to $197 billion

Summary

The U.S. trade deficit declined marginally to $901 billion in 2025 from $904 billion in 2024, remaining the third-highest on record despite President Trump's extensive tariff policies. While exports rose 6% and imports increased nearly 5%, the goods trade deficit hit a record $1.24 trillion, up 2%, driven by increased imports of semiconductors and technology products from Taiwan to support AI infrastructure investments.

Key Trade Developments:

• China: Goods trade deficit plummeted 32% to $202 billion amid ongoing U.S.-China tensions, with both exports and imports declining sharply
• Taiwan: Goods deficit doubled to $147 billion as trade diverted from China
• Vietnam: Goods gap surged 44% to $178 billion, also benefiting from trade diversion
• Mexico: Goods deficit widened to $197 billion from $172 billion in 2024
• Canada: Goods deficit shrank 26% to $46 billion

The U.S. services trade surplus expanded to $339 billion from $312 billion, driven by banking and tourism sectors.

Market Implications:

Economist Chad Bown of the Peterson Institute warns that Taiwan and Vietnam may become targets for additional tariffs if Trump prioritizes bilateral trade balance numbers over strategic considerations regarding China competition. Trade patterns showed front-loading behavior in Q1 2025 as companies rushed imports ahead of tariff implementation, with the deficit narrowing through the remainder of the year.

Despite tariffs—paid by U.S. importers and often passed to consumers—inflationary impacts have been lower than initially projected by economists. The administration continues negotiating USMCA renewal with Mexico and Canada.