US Trade Deficit Shrinks as Tariffs Take Effect

The U.S. trade deficit narrowed by 16% to $60.2 billion in June 2025, marking the smallest gap since September 2023. This improvement was mainly due to a sharp drop in imports, especially consumer goods, as President Trump's tariffs took effect, while exports declined modestly. The goods deficit with China decreased by $4.6 billion to $9.4 billion, reflecting the impact of elevated tariffs and ongoing trade negotiations. The narrower trade gap contributed to a second-quarter rebound in U.S. GDP growth, following a previous decline from pre-tariff stockpiling. However, deficits with other major partners, including Mexico and Vietnam, remained high, and continued volatility is expected as tariff escalations persist. The average U.S. tariff rate has now reached its highest level since 1934, underscoring uncertainty in global trade.