Through President Donald Trump’s first full 10 months in office, the cumulative U.S. trade deficit in goods and services was down 3.9% from the same period in 2024. His claim that he has “slashed our trade deficit by 77%” appears to compare the monthly trade deficit in January 2025 to the deficit nine months later in October.
Economic experts told us that Trump’s method is not the preferable way to measure whether the overall trade imbalance with international trading partners is up or down.
“[L]ooking at changes from one month to another is not a reliable way to assess whether the trade deficit is rising or falling in any meaningful sense,” Kyle Handley, a professor of economics at the University of California, San Diego, wrote in an email to us.
He said “[m]onthly trade balance figures are extremely volatile” and “reflect timing of shipments, energy prices, seasonal adjustment noise, and one-off transactions.” He suggested instead looking at trade trends over several months or, when possible, a full year.
On multiple occasions, however, Trump has claimed to have already reduced the trade deficit by a large amount based on just two months of data.
“We had the largest trade deficit in world history” under former President Joe Biden, “but in one year I’ve slashed our gaping trade deficit by a staggering 77%,” Trump said in Jan. 27 remarks in Iowa, for example.
In a speech at the World Economic Forum on Jan. 21, Trump made it more clear that he was comparing the trade deficit in one month to another, saying, “In one year, I slashed our monthly trade deficit by a staggering 77% — and all of this with no inflation, something everyone said could not be done.” The president highlighted the drop in the monthly trade deficit again in a Jan. 30 Wall Street Journal op-ed, in which he attributed the “astonishing” decrease to “the help of tariffs.”
He even predicted in a Jan. 20 White House press conference: “Next year we won’t have a trade deficit.”
To be clear, the Bureau of Labor Statistics says that the annual inflation rate has declined from 3% to 2.7% since Trump has been back in office, but it’s not at 0%. So prices are still increasing, just at a slower pace. His emphasis on the monthly trade deficit could also mislead people hearing or reading his remarks.
“The monthly trade balance has been unusually volatile this year, so I would be cautious about drawing conclusions from the data so far,” Robert Johnson, an international economist and associate economics professor at the University of Notre Dame, told us in an email.
In October, U.S. imports of goods and services exceeded exports by about $29.2 billion, the lowest one-month gap in trade since 2009, according to the Bureau of Economic Analysis. The October figure was down roughly 77.3% from the $128.8 billion deficit in trade in January last year. That appears to be how Trump calculated the percentage, although the White House did not confirm that when we asked.
But Johnson said that deficits were “unusually large” in early 2025, between roughly $120 billion and $136 billion in January, February and March, because U.S. importers stocked up on goods to build their inventories before various tariffs on imported products that Trump had said he planned to implement went into effect. “Then, after the tariffs were put in place, imports fell back to normal,” producing smaller monthly deficits in later months.
“Whether this is a permanent change, or simply reflecting the drawdown in inventories, is too soon to tell,” Johnson said.
“If you just take the number from a month and you compare it to a number from another month, then you’re just introducing a lot of all of the noise that’s in the monthly data,” Monica de Bolle, a senior fellow at the Peterson Institute for International Economics, told us in an interview.
When the monthly trade deficit in goods and services dipped to a 16-year low in October, some economists attributed the decline mostly to an increase in U.S. exports of gold and a decrease in imports of pharmaceuticals. Meanwhile, BEA data released on Jan. 29 show that the monthly deficit nearly doubled to $56.8 billion in November, which would be a 55.9% drop from January – and would make the 77% figure outdated.
“Large month-to-month swings are common, even in periods with no underlying structural change in trade policy or economic conditions,” Handley, at UC San Diego, said. “For that reason, economists almost never evaluate claims about the ‘trade deficit’ based on comparisons between two individual months.”
He listed other measurements that better assess whether the trade deficit is rising or falling, such as comparing cumulative deficits within a year or year-to-date totals compared with the same period in prior years.
“On those measures, the claim that the deficit fell sharply in 2025 does not hold up,” he said.
As we noted, when totaling the trade deficit in each of Trump’s first full 10 months in office in 2025, from February to November, the most recent data available, the gap between imports and exports was $710.7 billion – a 3.9% decline from the same period in 2024. On the other hand, the trade deficit including all months from January to November last year was $839.5 billion – up 4.1% from the same 11 months in 2024.
Trump didn’t take office until Jan. 20, but to reemphasize Johnson’s point, there was a large trade deficit in the first quarter of 2025 as importers rushed to acquire goods ahead of Trump’s proposed tariffs.
Trade data for December, and thus all of 2025, should be published on Feb. 19, according to the Census Bureau’s release schedule. The largest annual U.S. trade deficit in goods and services on record was about $923.7 billion in 2022, during the Biden administration, according to BEA data going back to 1960. (The Census Bureau and BEA jointly provide this data.)
Although Trump may view a trade deficit as something negative, many economists don’t see it that way.
“A trade deficit sounds bad, but it is neither good nor bad,” Tarek Alexander Hassan, a professor of economics at Boston University, wrote in an April 2025 opinion post. “It doesn’t mean the US is losing money. It simply means foreigners are sending the US more goods than the US is sending them.”
Trade Deficit Not Going Away Soon
The experts we consulted also told us that the trade deficit is unlikely to be eliminated “next year,” as Trump claimed.
“It is still the case that the U.S. is not self-sufficient in everything,” de Bolle, at PIIE, said. “It may be able to export a lot, but it still imports way more than it exports.”
She said on a macroeconomic level, the U.S. consumes more than it saves, and “that is going to translate into a trade deficit most of the time, not a trade surplus.”
Handley said to proceed “very cautiously” with predictions that the trade deficit will end due to tariffs, as Trump suggested in his Jan. 20 White House remarks.
“Trade deficits reflect saving and investment balances, exchange rates, and macroeconomic conditions, not just tariffs,” Handley said, adding that tariffs could reduce the exports of U.S. manufacturing firms by increasing the cost of goods imported for production, “and thus the deficit will not improve.”
He noted that most of the tariffs that Trump imposed in 2018 and 2019, during his first presidential term, applied to goods that American manufacturers imported for production purposes. “When their inputs got more expensive, their exports slowed down as well,” he said. “We are seeing those same dynamics right now.”
The last time that the U.S. did not have an annual trade deficit in goods and services was 1975. That year, there was a trade surplus of $12.4 billion, according to BEA records.
There is also the issue of whether all of Trump’s second-term tariffs will continue as implemented.
The Supreme Court is expected to rule this year on the legality of some Trump tariff policies. That will determine whether the tariffs remain in place in their current form.
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