U.S. Trade Deficit Falls More Than 35% Year-over-Year

The U.S. trade deficit has declined to its smallest level since mid-2020, dropping more than 35% compared with the same period last year, according to newly released trade data.

Key Developments

• Exports increased by about 6% from a year earlier, reaching near-record levels. Inflation-adjusted exports of consumer goods were reported at their highest on record.

• The seasonally adjusted goods trade deficit with China narrowed to one of its lowest points since 2009.

• In the third quarter of 2025, real exports grew at an annual rate of 4.1%, while imports fell by roughly 5%, contributing close to 1 percentage point to overall real GDP growth.

• The November trade deficit was less than half of what it was in the same month the previous year, supported in part by higher tariff revenues.

Background

The current administration has implemented a series of tariff adjustments and trade actions since April as part of a revised U.S. trade policy. Officials say these measures have strengthened the United States’ negotiating position in discussions with several major economic partners. According to the administration, these discussions involve countries and regions representing more than half of global GDP, including the United Kingdom, European Union, Japan, China, South Korea, and multiple nations in Southeast Asia and Latin America.

Businesses in sectors such as manufacturing, energy, and technology have announced new investment plans in response to recent trade and industrial policy changes, with several firms expanding or relocating production capacity within the United States.