U.S. Trade Deficit Shrinks to $60.2 Billion, Tightest Since 2023

The U.S. trade gap narrowed sharply in June, falling 16% from May to $60.2 billion, as companies scaled back imports following a surge earlier in the year. The deficit is now at its lowest level since September 2023, according to Commerce Department data released August 5.

Imports Fall as Firms Adjust

The value of imports dropped 3.7% in June, the lowest since March 2024, while exports also declined but at a smaller pace.

• Consumer Goods: Imports fell to the lowest level since September 2020.
• Industrial Supplies & Motor Vehicles: Also recorded notable declines.
• Capital Equipment: Imports increased, signaling continued business investment.

The pullback follows what analysts described as a rush to import goods earlier this year ahead of new tariff announcements.

Impact on Economic Growth

The narrowing trade gap contributed to stronger second-quarter growth.

• The U.S. economy expanded at an annualized rate of 3% in Q2, according to the government’s initial estimate.
• Net exports added 5 percentage points to GDP, a sharp reversal after subtracting at record levels in the first quarter.
• Economists caution that “under the surface, the economy is losing momentum,” with consumer spending slowing.

Tariff Policy Adds Uncertainty

The White House last week released new adjusted reciprocal tariff rates for countries without trade agreements with the U.S. by the August 1 deadline.

• President Trump is expected to announce additional tariffs on pharmaceuticals, semiconductors, critical minerals, and other key industrial products in the coming weeks.
• These measures could further disrupt trade flows, particularly in sectors critical to manufacturing and technology.

Trump has framed tariffs as a way to encourage foreign investment, strengthen domestic production, and raise government revenue while bolstering national industrial security.

Shifting Trade Balances

The June data showed declines in U.S. deficits with several major trading partners:

• China: Merchandise-trade shortfall narrowed to its lowest since data began in 2009.
• Mexico: Gap narrowed after hitting a record high in May.
• Canada: Deficit reached its smallest since late 2020.

On an inflation-adjusted basis, the merchandise trade deficit narrowed to $84.6 billion, down from a record earlier in 2025.

Source: Transport Topics