Trump Tariff Strategy Fails to Curb U.S. Trade Deficit as December Gap Surges to $70.3 Billion
The trade strategy championed by the administration of Donald Trump was built around one core objective: narrowing America’s trade deficit. However, recent figures suggest that the approach is not producing the intended outcome.
Latest Bureau of Economic Analysis data shows the U.S. trade deficit widening in December despite President Donald Trump’s tariff push, raising questions about the effectiveness of his trade strategy.
President Trump has repeatedly expressed alarm over the size of the U.S. trade gap, citing both economic vulnerabilities and national security threats. Acting on these concerns, he introduced a broad tariff framework that heightened geopolitical strains worldwide.
Andrew Caballero-Reynolds/AFP/Getty Images
Yet the numbers show little evidence of a meaningful correction in the imbalance between imports and exports.
According to newly released data from the Bureau of Economic Analysis (BEA), the U.S. goods and services trade deficit climbed to $70.3 billion in December. That represents a $17.3 billion increase from November’s $53 billion shortfall.
The widening gap was largely driven by a 3.6% jump in imports, which reached $357.6 billion—$12.3 billion higher than the previous month. At the same time, exports declined. December exports totaled $287.3 billion, marking a $5 billion drop from November levels.
Even sectors where the United States traditionally posted a surplus showed signs of weakening. The services sector surplus narrowed by $1.6 billion in December, settling at $29 billion.
Specific industries reflected notable shifts. Industrial supplies and materials recorded an $8.7 billion reduction in trade balance, while imports in that same category increased by $7 billion.
Despite the sizable monthly deficit of roughly $70 billion, there has been marginal year-over-year improvement. For 2025, the total goods and services deficit declined by $2.1 billion, a 0.2% decrease compared with 2024.
Earlier in 2025, from July through October, the monthly deficit had been trending downward, which also reduced the three-month moving average. However, the trend reversed toward the end of the year. The monthly shortfall rose from approximately $30 billion to more than $70 billion by December—nearly matching the level recorded in December 2024 before President Trump’s election victory.
The Broader Trade Agenda
President Trump outlined his trade priorities in an executive order issued on Liberation Day in April 2025. In that directive, he argued that persistent annual goods deficits had weakened U.S. manufacturing, limited the expansion of advanced domestic production, strained critical supply chains, and increased reliance on foreign adversaries for defense-related capabilities.
These concerns are echoed in parts of the business community. In his 2023 annual letter to shareholders, Jamie Dimon, CEO of JPMorgan Chase, stressed the need for the United States to reduce dependence on potential adversaries such as China. He wrote that America should not rely on rival nations for materials vital to national security or share technologies that could strengthen their military power, urging clear definitions of such issues and decisive action if required.
There are, however, signs of progress in one area. BEA data shows that the U.S. trade deficit with China fell sharply in 2025, declining by $93.4 billion to $202.1 billion. Exports to China dropped by $36.9 billion to $106.3 billion, while imports fell by $130.4 billion to $308.4 billion.
As noted by Jim Reid of Deutsche Bank, although the overall U.S. trade position has remained relatively stable, there has been significant rerouting of trade flows. China now accounts for just 7% of U.S. imports, down from 13% in 2024 and more than 20% before the initial round of Trump-era China tariffs in 2018, underscoring the extent of U.S.-China decoupling.
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