Noveember 19, 2025

The trade deficit narrowed by $18.6 billion in August to $59.6 billion after having widened by $19.1 billion in July..  Firms raced to import goods in the first three months of the year prior to the imposition of tariffs, but imports subsequently fell to a lower level than normal in the next three months as imports shrank dramatically.  Because businesses and consumers purchased so many imported goods earlier in the year prior to the imposition of tariffs, they needed fewer than normal imported goods for the next few months.  Aftger those wild swings in the first half of the year, the trade deficit appears to have leveled off

Exports rose 0.1% in August to $280.8 billion after having risen 0.3% in August.  In the past year exports have risen 1.9%.

Imports declined 5.1% in August to $340.4 billion after having risen 5.9% in July.   In the past year imports have declined 1.9%.

The trade deficit in real terms narrowed by $17.1 bilion in August to $83.7 billion after having widened by $16.1 billion in July.

We expect the trade data to exhibit more normal changes and levels in the months ahead.  For what it is worth, we expect the trade data to have virtually no impact on third quarter GDP growth and little impact on GDP growth in 2026.

Stephen Slifer

NumberNomics

Charleston, SC