Goods shortfall hit a record $1.24 trillion as front-loaded imports and supply chain rerouting undercut the administration’s trade agenda
The United States posted an overall trade deficit of 901.5 billion dollars in goods and services for 2025, virtually unchanged from the prior year’s 903.5-billion-dollar shortfall, despite the most sweeping tariff campaign in more than eight decades. The merchandise-only gap widened to a record 1.24 trillion dollars, underscoring the limited near-term impact of import duties on the nation’s structural trade imbalance.
Commerce Department data released in February 2026 showed that the December trade deficit alone surged to 70.3 billion dollars, up 32.6 percent from November and well above the 55.5-billion-dollar consensus forecast from economists surveyed by Dow Jones. For the full year, exports rose 6.2 percent to 3.43 trillion dollars while imports climbed 4.8 percent to 4.33 trillion dollars.
The year’s trade flows were heavily shaped by the rollout of new duties. President Trump in April announced an across-the-board duty of 10 percent on all imports alongside targeted reciprocal tariffs aimed at countries running the largest surpluses against the United States. In response, businesses front-loaded purchases of foreign goods during the first quarter, driving imports to record highs and temporarily inflating the deficit.
Import growth slowed sharply toward year-end as the tariffs took hold, with October recording the lowest monthly deficit since 2009. However, the full-year numbers reveal that the overall gap barely moved. As Nationwide financial markets economist Oren Klachkin observed, the trade deficit decreased only 2.1 billion dollars—or 0.2 percent—on an annual basis, even as dramatic shifts occurred beneath the surface.
The composition of the deficit shifted significantly. The goods trade gap with China fell to 202.1 billion dollars from 295.5 billion the prior year—its lowest level since the early 2000s—as US imports from China plunged 30 percent under the weight of tariffs exceeding 28 percent on average. But the reduction was offset almost entirely by widening deficits with other trading partners.
Vietnam saw its bilateral goods deficit with the United States balloon to 178.2 billion dollars from 123 billion in 2024. Taiwan’s deficit nearly doubled to 146.8 billion dollars from 73.8 billion, driven by surging imports of semiconductors and computer accessories for AI data centers. Mexico’s deficit also expanded to 196.9 billion from 171 billion. The European Union maintained the largest bilateral goods shortfall at 218.8 billion dollars.
A New York Federal Reserve research paper noted that approximately 90 percent of the economic burden of the tariffs fell on American firms and consumers rather than foreign exporters, a finding that aligns with the broader pattern of supply chain rerouting rather than reshoring. Companies facing higher duties on Chinese goods increasingly sourced from Southeast Asian and Latin American suppliers, shifting the geographic composition of the deficit without reducing its overall size.
Exports provided some bright spots. Nonmonetary gold recorded the largest export increase, followed by finished metal shapes, intellectual property charges, and natural gas. Services exports rose modestly, with the services trade surplus standing at approximately 335 billion dollars for the year.
With tariff policies expected to remain in place or expand further in 2026, economists anticipate continued volatility in monthly trade figures. The structural forces driving the deficit—strong US consumer demand, the dollar’s reserve currency status, and relatively higher growth compared to major trading partners—remain firmly in place.
Sources
1. “U.S. trade deficit totaled $901 billion in 2025, barely budging despite Trump’s tariffs” — CNBC, February 19, 2026. https://www.cnbc.com/2026/02/19/us-trade-deficit-totaled-901-billion-in-2025-despite-trumps-tariffs.html
2. “US trade deficit in goods widens to new record in 2025” — CBS19 News / AFP, February 19, 2026. https://www.cbs19news.com/us-trade-deficit-in-goods-widens-to-new-record-in-2025/article_962ac372-6ea0-5499-bea4-661462037e3c.html
3. “U.S. International Trade in Goods and Services, December and Annual 2025” — U.S. Bureau of Economic Analysis, February 19, 2026. https://www.bea.gov/news/2026/us-international-trade-goods-and-services-december-and-annual-2025
4. “U.S. runs record trade deficit in goods, despite Trump’s tariffs policy” — The Washington Post, February 19, 2026. https://www.washingtonpost.com/business/2026/02/19/tariffs-trade-deficit-2025/
5. “United States Balance of Trade” — Trading Economics, February 2026. https://tradingeconomics.com/united-states/balance-of-trade
