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The U.S. Trade deficit widened to $70.3 billion in December, a 32.6 percent increase and the largest gap in five months, according to data released Thursday by the Commerce Department. The figures capped a year in which the overall trade deficit remained stubbornly high at $901.5 billion, despite President Donald Trump’s aggressive imposition of tariffs on foreign goods.
The December shortfall was significantly above economists’ expectations of $55.5 billion, according to Reuters. Imports rose 3.6 percent to $357.6 billion, driven by a surge in industrial supplies and materials, including non-monetary gold, copper, and crude oil. Imports of capital goods, particularly computer accessories and telecommunications equipment, also increased substantially, likely linked to investments in data centers supporting artificial intelligence development.
While imports climbed, exports fell 1.7 percent to $287.3 billion in December. However, capital goods exports saw an increase, boosted by semiconductor shipments, and consumer goods exports also rose, including pharmaceutical preparations.
For the full year 2025, the U.S. Trade deficit totaled $901.5 billion, a slight decrease of 0.2 percent, or $2.1 billion, from the $904 billion recorded in 2024. Despite this marginal decline, the 2025 deficit remained the third-highest on record, and the $1.24 trillion goods deficit was the highest ever recorded.
The administration’s trade policies, including a 10 percent across-the-board tariff on imports and targeted “reciprocal tariffs,” aimed to reduce trade imbalances and bolster U.S. Manufacturing. However, the data suggest these measures have had limited success. Trade flows shifted, notably with a nearly 32 percent plunge in the deficit with China to $202 billion, as both exports to and imports from the world’s second-largest economy declined amid ongoing tensions. But this reduction was offset by increased trade deficits with other nations.
The goods gap with Taiwan doubled to $147 billion, and the deficit with Vietnam surged 44 percent to $178 billion, indicating a diversion of trade away from China. According to the Associated Press, American companies increased imports of computer chips and other tech goods from Taiwan to support investments in artificial intelligence.
Experts remain skeptical about the effectiveness of tariffs in addressing trade deficits. Chad Bown, a senior fellow at the Peterson Institute for International Economics, stated there is “just isn’t any evidence out there in the economic research literature to suggest that tariffs have materially impacted trade deficits historically when countries have implemented them.”
The report’s release was delayed due to last year’s government shutdown. Economists are now assessing the impact of the trade data on fourth-quarter GDP figures, with the widening deficit suggesting trade may have made little to no contribution to economic growth during that period. Veronica Clark, an economist at Citigroup, noted that strong imports should correlate with increased business investment and inventory levels, particularly in the context of AI-related demand.
