U.S. Trade Deficit Shrinks Sharply as Imports Plunge and Trump Tariffs Bite, China Gap Hits 21-Year Low
by Worthy News Washington D.C. Bureau Staff
(Worthy News) – The U.S. trade deficit narrowed dramatically in June, falling to $60.2 billion–the lowest level since September 2023–as imports plunged and the trade gap with China shrank to a 21-year low. The Commerce Department’s Bureau of Economic Analysis released the data Tuesday, highlighting the significant impact of President Donald Trump’s aggressive tariff policies on global trade dynamics.
Imports dropped by a steep $12.8 billion, or 3.7%, from May to $337.5 billion, mainly driven by a sharp decline in consumer goods and pharmaceuticals. Imports of goods alone fell 4.5%, with consumer goods down $8.4 billion and pharmaceutical products off by $9.6 billion. Exports remained nearly flat, slipping just 0.5% to $277.3 billion.
The resulting $60.2 billion deficit was slightly below Wall Street forecasts, which had projected a $60.9 billion gap, and marked a 16% improvement over the previous month’s revised figure of $71.7 billion. The goods deficit fell by $11.4 billion to $85.9 billion, while the services surplus ticked up marginally to $25.7 billion.
The narrowing trade gap was a key contributor to the strong 3.0% annualized GDP growth recorded in the second quarter, helping offset weakness earlier in the year. Analysts say the sharp drop in imports suggests that businesses and consumers rushed to stockpile goods in Q1 ahead of Trump’s new tariffs, leaving a lull in Q2 demand.
Trump Tariffs Take Effect
The trade figures come just days after President Trump announced sweeping new tariffs set to take effect August 7, ranging from 10% to 41% on a wide array of imported goods. According to the Budget Lab at Yale, the U.S. average tariff rate has now surged to 18.3%–the highest since 1934–compared to just 2-3% before Trump returned to office in January.
Trump has argued that America’s trading partners have long taken advantage of lopsided trade deals, and that his tariff policy is correcting decades of economic imbalance. “We are no longer the piggy bank of the world,” he said in a recent rally. “It’s America first–finally.”
China Trade Gap Collapses
One of the most notable developments in the June report was the dramatic narrowing of the U.S. trade deficit with China, which fell to just $9.5 billion–the lowest since February 2004. Imports from China plunged to $18.9 billion, the lowest since the 2009 financial crisis.
Over five consecutive months, the China trade deficit has shrunk by $22.2 billion, or 70%, as Trump’s 30% tariff on most Chinese goods continues to bite. The two nations held another round of tense negotiations last week in Sweden, though little progress was reported.
With Chinese goods becoming increasingly expensive due to tariffs, U.S. companies have been sourcing alternative suppliers, while Chinese exporters face mounting pressure amid softening demand.
As Trump’s August 7 tariff deadline approaches, analysts will be closely watching the next wave of trade data to gauge the broader economic impact. But for now, the numbers are clear: the Trump administration’s hardline trade strategy is leaving a visible mark on the global trade landscape–and reshaping America’s economic footprint.
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