The 6-month average trade deficit in goods fell to $80 billion, the least-bad since 2020.
By Wolf Richter for WOLF STREET.
The Census Bureau released the trade figures for February today, and they were another step in the right direction. The trade deficit in goods at $57 billion in February, was down by 52% from the trade deficit in February last year ($120 billion) and down by 58% from the tariff-frontrunning peak in March last year ($136 billion) just before the vast majority of tariffs kicked in. But monthly trade figures are very volatile. The 6-month average irons out those monthly ups and downs and shows the trend.
The 6-month average trade deficit in goods fell (improved) to $80 billion in February, the least-bad since September 2020, and down by 37% from the 6-month-average peak in March 2025. The tariffs are doing their job!
Since a trade deficit is a negative in the GDP calculation, it is shown here as negative figures, representing US cash flowing out of the US to other countries.
The tariffs are supposed to accomplish two goals: 1. Reduce the massive and unsustainable trade deficit in goods driven by the tsunami of imports; 2. Raise taxes from companies that continue to import anyway.
Here we’re looking at the first of those two goals: an improvement in the unsustainable trade deficit in goods. Tariffs are applied to goods, not to services. The future of the tariffs still hasn’t been etched into stone. But the effects so far are becoming clearer: a substantial reduction in imports of goods, and a big improvement in the massive and unsustainable trade deficit in goods.
Shifting supply chains and production to factories in the US is a slow process, especially when it involves building new factories or expanding existing factories. These projects take years from being first decided to actually starting mass-production. What has shown up over the first 10 months of the tariffs so far is the low-hanging fruit.
Imports of goods fell to $255 billion, the least-bad since December 2023.
The six-month average of imports improved to $270 billion, down by 11% from the peak of the six-month average in March 2025 ($302 billion), and a level first breached on the way up in mid-2022.
Imports are a negative in the GDP calculation and are expressed here in negative figures.
Exports of goods have been ticking higher, but they’re not nearly high enough to balance out the flood of imports. In dollar terms, the US is a big exporter of pharmaceutical products; energy products and petrochemicals; civilian aircraft, aircraft engines, and parts; machinery and industrial equipment; vehicles and parts; periodically nonmonetary gold; and many other products.
In February, exports rose to $196 billion, the second highest since October. The six-month average rose to a record $190 billion.
Exports are a positive factor in the GDP calculation and are expressed in positive figures here:
The combination of even slowly rising exports and rapidly falling imports produced the sharp improvement in the trade deficit in goods (first chart above).
And in case you missed it: Status of US Dollar as Global Reserve Currency: USD Share Drops to 31-Year Low as Central Banks Diversify into Other Currencies & Gold
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Any thoughts about the tariff refund issue?
Wait and see. But it has zero to do with these trade figures here. It has to do with the US budget and debt.
The US macroeconomic situation is so fundamentally poor – and the “money print/rate strangulation” “fix” is so played out (explicit, toxic inflation resulting from last go round…following 20 years of ZIRP Russian Roulette that barely managed to avoid *explicit* inflation until it…didn’t) that regardless of what the Courts determine/enforce/etc, DC is going to *have to* stick with some/any variation of the tariffs.
There is a reason why Biden never undid the first round of Trump tariffs – they were helping to undo the long-term macro threat (ie,
1-perpetual trade deficits financed with
2-perpetual fiscal deficits made possible by
3-frequent money printing,
4-eventually, inevitably resulting in inflation).
That death spiral has finally made itself felt and the US is out of lies it can tell itself (financing trade deficits with printed money, ultimately)
The same dynamic is going to apply here – some/any variation of the tariffs are going to be kept in place by Trump, his successor, or the Congress (if things are so desperate that Congress has to locate its balls after decades of avoiding adult decisionmaking).
I agree with that. I’m not as much of a doomer as some others, but I do think the “We’re a very rich country that can afford a stable middle-class lifestyle for everyone” jig is up.
I understand that much of the exports was gold shipped for refining or to pay for Chinese products like Rare Earths
You understand nada. Just spreading braindead internet manure here.
1. Nonmonetary gold exports jumped month to month by $8 billion, to $18 billion in February. Total exports jumped to $196 billion. Gold exports in February accounted for just 9% of total exports.
2. Gold exports have zero to do with IMPORTS. Tariffs target imports, not exports.
I’m not an expert on the triffin dilemma but this rebalancing had to happen, luckily it’s happening sooner by choice rather than later by the firm grip of the invisible hand.
Just a follow-up from a comment I made here about month ago about Noem and Bondi being inept. They have both been fired.
Don’t you know the DOW was at 50,000!!!
Thank you, Wolf! Good to see President Trump exonerated on this topic. The woke crowd is too quick to dismiss him for everything he does. His speech last night was inspiring! Next, we need to get fully behind our president on the Middle East war. He needs us now more than ever!
Wait What? Something that the president stated would be a good thing actually is working? Where is the popular press reporting this???
This war doesn’t put America First.
What caused the runup in exports and imports $ from 2020-2023?
Is that just the inflation wave making the $ amount higher but not the actual amount of goods?
I didn’t see in the article if these are inflation-adjusted $ values or not.