The BEA reports the trade deficit shrunk in September.
Please consider the U.S. International Trade in Goods and Services Report for September 2025
- September exports were $289.3 billion, $8.4 billion more than August exports. September imports were $342.1 billion, $1.9 billion more than August imports.
- The September decrease in the goods and services deficit reflected a decrease in the goods deficit of $7.1 billion to $79.0 billion and a decrease in the services surplus of $0.6 billion to $26.2 billion.
- Year-to-date, the goods and services deficit increased $112.6 billion, or 17.2 percent, from the same period in 2024. Exports increased $125.1 billion or 5.2 percent. Imports increased $237.7 billion or 7.7 percent.
“A common — but fundamental — misunderstanding of current trade flows. Chinese exports are still coming to the US. They just are taking an extra stop along the way. Components go to SE Asia, Taiwan and Mexico for final assembly for the US market.“
Is Trump Succeeding at Rebalancing Trade With His Global Tariffs?
On December 8, I asked Is Trump Succeeding at Rebalancing Trade With His Global Tariffs?
it’s hard to make a case on what’s happening to non-full-year trade balances other than for China, Ireland, Taiwan, and India.
Only China shows a clear improvement. But some of the China improvement is a mirage of tariff avoidance through Vietnam, India, and Mexico.
My chart shows Taiwan was already running ahead of 2024 despite only 8 months of data. India and Vietnam appear problematic as well.
Nine Months of 2025 vs 2024 Total in Billions
- China improves from -296 to -160
- Vietnam worsens from -123 to -130
- Ireland worsens from -87 to -106
- Taiwan worsens from -74 to -94
- India worsens from -46 to -47
Four countries now have a higher deficit through September than for the full 2024 year.
Brad Setser commented “What is sent to Saigon doesn’t stay in Saigon.“
Although our trade deficit with Mexico may be improving, perhaps it isn’t. Moreover, it’s highly likely that China is also masking some exports through Mexico in addition to Vietnam, India, and Taiwan.
What Happened to Competition
Taking Credit for a Fake Victory
Projected Balance of Trade at Current Levels
The blue dashed line takes the current deficit through September, multiples by 12 and divides by 9.
Since that likely overstates the initial tariff front running, let’s try another projection method.
The BEA states “The September decrease in the goods and services deficit reflected a decrease in the goods deficit of $7.1 billion to $79.0 billion.”
Assume the improvement stabilizes (although I am skeptical there really was an improvement.) If deficits are at $79.0 billion for the last three months of the year, that would be another $237 billion.
-$982 – $237 = -$1,219.
For the full year, we are on a path to no change for all these efforts.
Meanwhile, we are destroying jobs and taxing US consumers along the way.
For discussion of Ireland and how Trump’s tax policy encourages oversees production of pharmaceuticals, please see Is Trump Succeeding at Rebalancing Trade With His Global Tariffs?
In case you missed it, please see President Trump Promised a Manufacturing Boom. Where Is It?
The answer is China.
On the home front, Powell Blames Tariffs for Inflation, Says Job Growth Is Negative
Also on the home front, I commented Health Care Inflation Bomb Makes the Fed’s 2 Percent Target Almost Impossible
Let’s discuss 2026 health care premiums and what they mean to the Fed’s preferred measure of inflation.
But all this is OK because affordability is a hoax and the US is booming.
Do trade deficits really matter though?
Welcome to the geriatics ward. Meet patient Biden and now patient Trump. Geez people, who would vote their grandfather for President???
Regarding the lower deficit? The majority of it happened because of gold leaving the US and heading to other markets.
Yields are up despite Trump forcing rates lower and QE to resume…
Got gold mining stocks?
Today we are testing all time highs and we should be watching for a breakout like silver is experiencing.
You can’t have tariffs low enough that they don’t cause massive inflation, and bring manufacturing back to the USA. If the cost of a dishwasher jumps from $800 to $5000, then purchases will crash, and everyone will start building factories in the US. But it will take 3 years to get those factories up and running. MAGA isn’t willing to pay that price. So no one should have any expectation that this will bring manufacturing back. But it is a nice new tax on importers to offset the tax breaks on all corporations. Importers lose, bankers win.
Anyone who doesn’t think having a recession/depression wasn’t part of the plan didn’t do much reading about what Trump wants to do. We are quickly headed to an autocratic state. Having full economic power over people is a feature not a bug
CORRECT. it’s crumbling evil empire 101. just like when the USSR failed, the oligarchs stole everything not nailed down. it was a sight to be seen. i eyewitnessed it from inside the boardrooms of oligarchs to the people desperate enough to sell off their military uniforms and medals………and their bodies. i smell the same situation here now.
How does losing the house and Senate pay into that plot?
You forgot to include, “Got exit strategy?” at the end of your comment.
Biggest con job ever is when conservatives voted for freedom and democracy in 2024, financial self-enslavement is more like it.
Trump’s brain is on the same track as Biden’s was. Why in any universe would people elect nursing home residents to lead them.
Impoverishing your population is a way to get that trade deficit down.
I’m already dreading the whole “election hoax”, “rigged election” nonsense when republicans get crushed at the midterms. It will be endless whining and no doubt Trump will attempt to invalidate the elections somehow because the gerrymandering won’t work with so many people broke and angry.
I make a bold prediction that inflation will be approaching 5% by midterms (assuming Trump doesn’t shutdown the BLS entirely).
We’re less than a year away now from elections…..
They will try and rig the election with the help of some dollar store Elon Musk , screw it up so badly they lose anyway, and then cry about how the election was rigged.
Indiana just slapped Trump in the face. ROFL!
https://www.nbcnews.com/politics/rcna247833
INDIANAPOLIS — The Indiana Senate voted against a new Republican-drawn congressional map Thursday, rejecting a bid led by President Donald Trump aimed at boosting the party in next year’s midterm elections.
The vote was a rare and stunning instance of elected Republicans rebuking Trump, who had pressured Indiana lawmakers for months to pass new district lines.
It’s hard to imagine that there are still politicians with some honor and integrity left. I tend to think politicians really reflect their base. Kudos to the good people of Indiana. The opposite of your average Texan.
It’s almost as if that would be the third or fourth rendition of the same song. How many recognize it from when it was played earlier?
What happened to the Natural Gas price past week? HOW DARES YOU!
A hoax could be perpetrated by anyone…
affordability is clearly a “con job by the democrats”…
affecting only republicans.
At the same time Bessent says move to a red state to save 50bps on your inflation bleed
We lost. China is wining even with the tariffs. That was probably the last gasp effort at stopping the de-industrialization of the U.S.
I guess the U.S. just needs to stick with what it is good at and that would be consumption and services. As long as we can keep growing the servicer industries and consuming stuff from China……then GDP, the economy, and the stock markets will go up.
Germany manufacturing looks like it lost to China too. After 25 years of increasing exports, exports reversed in 2022 and have been declining for 3 years.
China appears unstoppable.
True – but I think the US should keep trying, by other means.
You won’t find high school graduates who can’t read in China. The West wants to import the “Worst of China” (authoritarianism and surveillance), but not at least some of the “Best of China” (tough schools & discipline, hard work and national pride, etc.).
Picture this.
“We need to invest in manufacturing to MAGA”
Meanwhile the economists go on daily about the world biggest investment bubble that is AI.
550 acre data centers instead of factories and investment dollars skyrocketing on AI is not investment in goods but in services.
This isn’t an effort to build manufacturing capacity. If there was, there would be investments to match. There aren’t.
You got it! There will be no manufacturing expansion in the U.S. that leads to any discernible job creation. What manufacturing expansion that we get will be driven by a handful of large companies. The jobs created by these companies are likely to be more than offset by the contraction in the number of small manufacturers who cannot afford to compete in their markets, given the tariff costs on their cost inputs.
The Trump administration’s policies are not well thought out beyond the immediate propaganda impact.
The point was always the propaganda impact. When you realize that, it all becomes clear.
How can anyone honestly believe anything that comes out of dc, especially these days from the top on down.