Widening trade deficit, higher prices: Trump tariffs not quite working as expected, U.S. data suggests

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Widening trade deficit, higher prices: Trump tariffs not quite working as expected, U.S. data suggests

Published: 16 Dec. 2025, 11:31

Audio report: written by reporters, read by AI

U.S. President Donald Trump speaks during a roundtable event to discuss aid for farmers, in the Cabinet Room of the White House in Washington on Dec. 8. President Trump is announcing a $12 billion aid package for U.S. farmers, targeting a key support base hit by his trade policies. Since Trump's return to the White House in January, many U.S. farmers have been battered by impacts of his wide-ranging tariffs, including retaliatory measures from trading partners. [AFP/YONHAP]

Despite U.S. President Donald Trump’s pledge to impose high tariffs to reduce the United States’ chronic trade deficit, the data tell a different story. The goods trade deficit has continued to grow even after the trade war began, and recent monthly reductions have been attributed to a slowdown in domestic demand — a sign of economic contraction rather than a healthy recovery.

According to the U.S. Department of Commerce on Dec. 14, the country’s goods trade deficit — the difference between exports and imports — totaled $978.7 billion from January to September this year, up $106.2 billion from the $872.5 billion recorded during the same period last year.

The deficit widened sharply at the beginning of the year as companies front-loaded imports in anticipation of tariff hikes, particularly in the first quarter of January to March this year.

While import adjustments have since narrowed the monthly deficit in August and September compared to last year, the improvement is viewed as a “recessionary” decrease driven by weakened domestic demand. In September, the goods trade deficit fell to $52.8 billion — the smallest since June 2020. Exports rose by 3 percent that month, while imports edged up just 0.6 percent.

Analysts say the trade war did little to reduce the overall deficit but instead shifted the deficit to different trading partners. The U.S. goods trade deficit with countries such as Korea, Japan, China and the European Union narrowed, while deficits with Mexico, Southeast Asia and Taiwan expanded.

This photo shows an aerial view of the port in Qingdao in China's eastern Shandong province on Nov. 3. China and the United States have recently agreed to lower the temperature in their spiraling trade war, bringing a precarious end to months of back-and-forth measures between the economic and technological powerhouses. [AFP/YONHAP]

From January to September this year, the U.S. goods trade deficit with China stood at $160.5 billion, down from $217.5 billion during the same period last year. The deficits with Korea and Japan also shrank, falling from $50.4 billion to $44.4 billion and from $49.8 billion to $48.4 billion, respectively — largely due to slower growth in U.S. imports of cars and machinery.

In contrast, the U.S. goods trade deficit with Mexico increased from $125.5 billion to $145.9 billion from January to September this year. Deficits with Vietnam and Thailand also rose — from $90.6 billion to $129.5 billion, and from $32.9 billion to $48.7 billion, respectively. The data suggests that U.S. tariffs targeting China prompted a shift in global supply chains, redirecting production and imports through Mexico and Southeast Asia.

The United States also saw a growing trade deficit with Taiwan. From January to September this year, the U.S. deficit with Taiwan surged to $94.4 billion, up from $54.5 billion during the same period last year. While U.S. exports to Taiwan totaled just $39.8 billion, imports reached $134.2 billion, driven largely by soaring demand for semiconductors and IT equipment amid expanding AI investment.

The broader impact of tariffs has extended beyond trade figures to the overall U.S. economy. Initial jobless claims rose to 236,000 last week, up 44,000 from the previous week — the sharpest weekly increase in nearly six years. Jobless claims are considered a leading indicator of labor market trends.

On Dec. 8, the Trump administration announced a $12 billion relief package for U.S. farmers, aimed at offsetting losses caused by the U.S.-China trade conflict, including the suspension of soybean exports. The move was intended to compensate for the fallout of the administration’s tariff policies using federal funds.

Shipping containers are seen at the port in Keelung, Taiwan, on April 9. [AFP/YONHAP]

Meanwhile, concerns over rising inflation are growing. According to research from regional branches of the Federal Reserve, tariffs increased the Personal Consumption Expenditures (PCE) price index by 0.5 percentage points as of this summer, and the core PCE index — which excludes volatile food and energy prices — by 0.4 percentage points.

Internal Fed analysis also found that tariffs raised prices of core goods by roughly 0.3 percent, which in turn pushed the overall inflation rate up by 0.1 percentage point. The Congressional Budget Office projected that tariff-related cost pressures could lower U.S. economic growth by an average of 0.06 percentage points per year over the medium term.

Some experts argue that the only tangible result of the Trump administration’s tariff strategy was increased tariff revenue, as it failed to reduce the trade deficit. According to the U.S. Department of the Treasury, the United States collected $236.2 billion in tariffs through November this year. That figure compares to about $80 billion in tariff revenue in 2023 and roughly $97 billion in 2024.

However, as businesses have largely completed front-loading imports to get ahead of tariffs, the pace of tariff revenue growth is slowing. Adding to the uncertainty is a pending U.S. Supreme Court ruling on the interpretation of the International Emergency Economic Powers Act (IEEPA), which served as the legal basis for many of the tariffs.

According to NBC, $90 billion of the $174 billion in tariffs collected through the end of September this year were based on IEEPA, meaning a ruling against the U.S. government could result in a partial or full refund of those tariffs to importers. In short, even the revenue gains touted as a success of the tariff policy now face legal uncertainty.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY KIM WON [[email protected]]