U.S. Trade Deficit Widens Despite Trump Tariffs, BEA Data Reveals December Reversal
Efforts by Donald Trump to shrink the United States’ trade deficit through sweeping tariffs are facing renewed scrutiny after the latest government data showed a sharp monthly increase in the gap.
December trade figures show the U.S. deficit climbing above $70 billion, raising doubts about the effectiveness of President Donald Trump’s tariff-driven rebalancing strategy.
The president has consistently warned that large trade imbalances create both economic exposure and national security vulnerabilities. Acting on those concerns, his administration implemented a tariff system that intensified global geopolitical tensions.
Andrew Caballero-Reynolds/AFP/Getty Images
However, the December trade report indicates that the strategy has yet to substantially rebalance America’s flow of goods and services.
Figures released by the Bureau of Economic Analysis show the U.S. goods and services deficit expanded to $70.3 billion in December, up from $53 billion in November—an increase of $17.3 billion.
The deterioration stemmed from rising imports and falling exports. Imports grew 3.6% to $357.6 billion, $12.3 billion higher than the prior month. Meanwhile, exports slipped to $287.3 billion, down $5 billion from November.
The services sector, traditionally a strong point for the United States, also saw its surplus narrow by $1.6 billion to $29 billion in December.
Looking at industry-specific changes, the balance in industrial supplies and materials declined by $8.7 billion, while imports within that category climbed by $7 billion.
Although the monthly deficit remains around $70 billion, there has been slight annual improvement. In 2025, the overall goods and services deficit fell by $2.1 billion, or 0.2%, compared with 2024.
During the middle of 2025—between July and October—the monthly deficit had been easing, which also reduced the rolling three-month average. Yet the final months of the year saw that progress reverse. By December, the monthly shortfall had risen from roughly $30 billion to more than $70 billion, nearly matching the figure recorded in December 2024 before President Trump secured the presidency.
Strategic Context and Shifting Trade Patterns
In April 2025, President Trump formalized his position in an executive order issued on Liberation Day, arguing that persistent trade deficits had eroded the U.S. manufacturing base, constrained advanced domestic production capacity, weakened supply chains, and increased defense-sector reliance on foreign rivals.
This perspective aligns with concerns voiced by business leaders such as Jamie Dimon of JPMorgan Chase. In his 2023 shareholder letter, Dimon emphasized that the United States should not depend on potential adversaries for essential national security materials or share technologies that could enhance their military capabilities, recommending clearly defined policies and unilateral action if necessary.
There are indicators of change in bilateral trade with China. In 2025, the U.S. trade deficit with China declined by $93.4 billion to $202.1 billion. Exports to China fell by $36.9 billion to $106.3 billion, while imports dropped by $130.4 billion to $308.4 billion.
According to Jim Reid from Deutsche Bank, the broader U.S. trade balance has not shifted dramatically overall, but trade flows have been significantly redirected. China’s share of U.S. imports has shrunk to 7%, compared with 13% in 2024 and more than 20% before the first wave of Trump’s China tariffs in 2018—highlighting the deepening decoupling between the two economies.
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