The U.S. trade deficit started the new year narrowing sharply as a weaker dollar and sweeping global tariffs tackled the imbalance.
In January, the goods and services trade deficit declined by 25.3 percent from the previous month to $54.5 billion, according to new data released by the Bureau of Economic Analysis on March 12. This is also down year over year. Economists had penciled in an imbalance of $66.6 billion.
The December trade gap was revised slightly higher to $72.9 billion.
The U.S. economy is coming off a turbulent first year of President Donald Trump’s trade agenda. The 2025 U.S. trade deficit was $901.5 billion, a minor 0.2 percent dip from the previous year.
The Supreme Court struck down a sizable chunk of the administration’s reciprocal tariffs, but the president immediately replaced them with a 10 percent global levy on foreign goods entering the United States.
A weaker greenback has also made American products more attractive in international markets.
The trade-weighted Nominal U.S. Dollar Index—a gauge of the buck against currencies of major U.S. trading partners—slumped by about 7 percent in 2025.
Imports and Exports
January’s headline number reflected a 5.5 percent, or $15.8 billion, increase in exports, bringing total shipments to more than $302 billion.
U.S. exports were led by a $9.4 billion increase in industrial supplies and materials and a $5.4 billion boost in capital goods. These gains were partially offset by a $2.8 billion drop in consumer goods.
Exports of services also rose by $1.2 billion to $106.7 billion to kick off 2026.
Imports dipped by 0.7 percent, or $2.6 billion, to below $357 billion. This was driven by a $3.3 billion decrease in consumer goods and a $2.8 billion decline in automotive vehicles, parts, and engines. Additionally, imports of industrial supplies and materials slipped by $1.4 billion.
Conversely, capital goods, including computers and telecommunications equipment, advanced by $3.4 billion.
Services imports ticked up by $200 million to $79.3 billion.
New data also suggest that the United States is improving its trade balance with other countries.
The deficit with the European Union fell by $5 billion to $6.1 billion in January, and the United States’ surplus with the UK climbed by $3.2 billion to $7 billion.
The U.S.–China imbalance was little changed, with the deficit sitting at $12.5 billion.
Trade in 2026
U.S. officials are not slowing down their measures to address unfair trade practices.
In a call with reporters on March 11, U.S. Trade Representative Jamieson Greer announced that the White House will launch new trade investigations under Section 301 of the Trade Act of 1974.
The first probe will focus on excess capacity and production in manufacturing sectors, with several key markets—including China, the European Union, India, Japan, and Mexico—under investigation.
The second investigation will center on about 60 countries that export goods produced with forced labor.
“Our view is that key trading partners have developed production capacity that is really untethered from the market incentives of domestic and global demand,” Greer said.
The high court ruled 6–3 on Feb. 20 that the president did not have the legal authority to impose import duties under the International Emergency Economic Powers Act—also known as the IEEPA.
However, within hours of the ruling, Trump signed an executive order implementing a new 10 percent global tariff, invoking Section 122 of the Trade Act. Under this provision, tariffs will expire within 150 days, requiring the White House to seek congressional authorization for an extension.
Treasury Secretary Scott Bessent said he believes that the previous tariff regime will return by the summer as the Department of Commerce and the Office of the U.S. Trade Representative complete their investigations.
“It’s my strong belief that the tariff rates will be back to their old rate within five months, and those are very fulsome authorities,” Bessent said in a March 4 interview with CNBC’s “Squawk Box.”
“They have survived more than 4,000 legal challenges. They are more slow-moving, but they are more robust.”
This comes as the United States, Canada, and Mexico are poised to engage in a joint review of the post-NAFTA trade agreement in the coming months.
Emel Akan contributed to this story.
