U.S. Trade Deficit Narrows Slightly Despite Trump Tariffs

Goods trade gap hits record high as imports surge to support AI investments

Published on Feb. 28, 2026

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The U.S. trade deficit narrowed slightly in 2025 to just over $901 billion, the third-highest on record, as exports rose 6% and imports increased nearly 5%. However, the deficit in goods trade widened 2% to a record $1.24 trillion, driven by surging imports of computer chips and other tech goods from Taiwan to support AI investments. The goods trade deficit with China plunged 32% but widened significantly with Taiwan and Vietnam.

Why it matters

President Trump's protectionist trade policies, including sweeping tariffs on imports, have failed to significantly reduce the overall U.S. trade deficit, though they have impacted the composition of trade flows. The widening deficits with Taiwan and Vietnam could draw new scrutiny from the Trump administration.

The details

Despite Trump's tariffs, the U.S. goods trade deficit hit a record $1.24 trillion in 2025 as American companies boosted imports of computer chips and other tech goods from Taiwan to support massive investments in artificial intelligence. The goods trade deficit with China plunged nearly 32% to $202 billion, but this was offset by surging deficits with Taiwan, which doubled to $147 billion, and Vietnam, which shot up 44% to $178 billion.

  • The U.S. trade deficit narrowed from $904 billion in 2024 to about $901 billion in 2025.
  • The U.S. goods trade deficit hit a record $1.24 trillion in 2025.

The players

Donald Trump

The President of the United States who implemented sweeping tariffs on imports in an effort to reduce the U.S. trade deficit.

Chad Bown

A senior fellow at the Peterson Institute for International Economics who said the widening trade gaps with Taiwan and Vietnam might put a 'bulls eye' on them this year if Trump focuses more on the lopsided trade numbers and less on the U.S. rivalry with China.

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What they’re saying

“The widening gaps with Taiwan and Vietnam might put a 'bulls eye' on them this year if Trump focuses more on the lopsided trade numbers and less on the U.S. rivalry with China.”

— Chad Bown, Senior Fellow, Peterson Institute for International Economics

What’s next

The U.S. is currently negotiating a renewal of a trade pact with Mexico and Canada that was reached during Trump's first term.

The takeaway

Despite Trump's protectionist policies, the overall U.S. trade deficit remains stubbornly high, though the composition of trade flows has shifted. The widening deficits with Taiwan and Vietnam could draw new scrutiny from the Trump administration, even as the rivalry with China appears to be easing.