US Trade Deficit Shrinks 16 Percent Amid Sharp Decline in Imports

The shortfall with China has plunged to the lowest level since February 2004.

Containers on a cargo ship awaiting offloading at Port Miami in Miami, Fla., on April 15, 2025. Joe Raedle/Getty Images

The U.S. trade deficit narrowed in June as President Donald Trump’s tariff plans continue to shift global trade patterns.

According to the Bureau of Economic Analysis, the overall goods and services trade gap declined by 16 percent to $60.2 billion from a slightly revised $71.7 billion in May.

The consensus estimate suggested a trade deficit of $61.6 billion.

Imports fell by almost 4 percent to $337.5 billion, the lowest since March 2024. The decline was driven by lower purchases of consumer goods, industrial supplies and materials, and automobiles and car parts.

Exports dipped 0.5 percent to a five-month low of $277.3 billion. Shipments of industrial supplies and materials fell, which was offset mainly by exports of capital and consumer goods.

The June data registered narrowing trade gaps with several key trading partners.

The U.S. deficit with China, for example, declined to a 21-year low of $9.5 billion from $13.94 billion in May.

Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer met with Chinese officials in Stockholm this past week. It was recommended that both sides extend the Aug. 12 deadline by 90 days to allow Washington and Beijing to iron out the details of a trade framework that encompasses broader economic issues.

“We’re getting very close to a deal,“ Trump told CNBC’s ”Squawk Box“ in an Aug. 5 interview. ”We’re getting along with China very well.”

New data show that America’s deficit with Mexico also slid, to $16.77 billion from $18.17 billion.

Hours before the Aug. 1 deadline, Trump authorized a 90-day extension to Mexico to reach a trade deal. The president, on Truth Social, announced that he would not raise U.S. tariff rates on Mexican goods. Mexico pledged to remove nonmonetary trade barriers, Trump said.

The U.S. trade gap with the European Union sharply contracted to $9.92 billion from $21.88 billion.

This comes soon after the United States and European Union reached a long-awaited trade deal, featuring a 15 percent levy on EU goods in exchange. The EU committed to purchasing $750 billion of U.S. energy products and investing $600 billion in the U.S. economy by 2029. If the 27-member bloc does not follow through on its pledges, Trump said, he would increase tariffs to 35 percent.

Conversely, the United States posted surpluses with the Netherlands ($6.2 billion), the United Kingdom ($2.2 billion), and Australia ($1.6 billion).

Despite the trends of the past few months, the trade gap has still widened in 2025. In the first six months of the year, the goods and services trade deficit has surged by more than 38 percent, or $161.5 billion, from the same time a year ago. Imports have risen by 12.1 percent to $243.7 billion, and exports have increased by 5.2 percent to $82.2 billion.

This past week, the Commerce Department’s Census Bureau reported that the U.S. goods deficit fell by $11.4 billion to $84.85 billion in June, the smallest gap since September 2023.

Treasury Secretary Scott Bessent (L) and Trade Representative Jamieson Greer address a press conference in Rosenbad after the trade talks between the United States and China concluded, in Stockholm, Sweden, on July 29, 2025. Magnus Lejhall/TT News Agency/AFP via Getty Images

A lower trade deficit contributed to the better-than-expected rebound in the second-quarter GDP growth rate.

In the April–June period, the U.S. economy expanded by 3 percent, topping the consensus estimate of 2.4 percent. Imports are subtracted from gross domestic product calculations because the GDP reflects the total market value of all goods and services produced domestically.

Although still early, the Atlanta Federal Reserve’s GDPNow Model estimates third-quarter growth at 2.1 percent.

Next Stage in US Trade

Trump signaled in his wide-ranging CNBC interview that more tariff announcements will be coming as “people love the tariffs.”

In the next week or two, the president said, new import duties on semiconductors and chips will be unveiled “because we want them made in the United States.”

He also confirmed that he will implement levies on pharmaceutical products entering the U.S. marketplace. According to the president, the plan would impose a “small tariff” on pharmaceuticals, which would then rise to as much as 250 percent after more than a year.

“We want pharmaceuticals made in our country,” Trump said.

Trump doubled down on his 25 percent tariff on India and warned that he could increase the rate “very substantially over the next 24 hours,” citing the country’s purchases of Russian crude oil.

Aug. 7 will be the next key date for the world economy. This is the start date for higher import taxes after being pushed back from Aug. 1 to allow the new tariff regime to be implemented.

The U.S. trade representative says the tariff rates on more than 60 trading partners are “pretty much set” and that he does not expect the levels to come down in the coming days.

“I expect I do have my phone blowing up,” Greer said in an Aug. 3 interview with CBS News’ “Face the Nation with Margaret Brennan.”

“There are trade ministers who, who want to talk more and see how they can work in a different way with the United States, but I think that we have, we’re seeing, truly the contours of the president’s tariff plan right now with these rates,” he said.

At the same time, Greer and other senior administration officials have stated that countries can negotiate and cut trade deals at any time.

According to the Yale Budget Lab, the current average effective tariff rate is 18.3 percent, the highest since 1934.