Trade deficit narrowed in August

November 19, 2025

The US trade deficit narrowed by 23.8% in August to $59.6 billon, reversing a jump in July. A -5.1% drop in imports drove the narrowing as new trade policy changes came online in August, including the bulk of announced Liberation Day tariffs. Wholesalers drained inventories to compensate for lower imports.

The headline data masks some of the GDP implications of trade because it does not account for changes in prices or nonmonetary gold. (Nonmonetary gold is not counted in calculating GDP.) After taking out nonmonetary gold, the deficit declined less than the headline suggests. (Accounting for shifting prices does not have a substantial impact on the headline.)

The decline in imports of nonmonetary gold accounted for about half of the fall in imports; outside of nonmonetary gold, imports dropped $9.0 billion. The remainder was fairly broad-based across consumer goods, capital goods, industrial supplies and foods. Consumer goods fell $3.7 billion; very few consumer goods categories logged increases. Capital goods declined by $3.4 billion, driven by a drop in computer accessories and telecommunications equipment. Only computers saw a substantial increase. Industrial supplies outside of nonmonetary gold dropped approximately $2 billion; most of that was copper as new tariffs came online. Food imports dropped by $1.6 billion in broad-based declines.

Automobiles increased slightly by $603 million, as an increase in trucks and parts offset declines in passenger cars. Imports of services were essentially flat.

Exports increased $0.3 billion, or 0.1% in August. However, gold dropped $1.1 billion, meaning that outside of nonmonetary gold, exports increased $1.4 billion. That still does not offset the large decline in nonmonetary gold imports, meaning the deficit narrowed by less than implied by the headline. Exports of consumer goods fell by $1.5 billion, mainly driven by pharmaceuticals. Automotive exports fell $391 million.

Exports of capital goods increased $2.4 billion, driven by computers and aircraft. Industrial supplies outside of nonmonetary gold increased approximately $500 million; crude oil alone increased $848 million. Exports of services increased $800 million on travel services, maintenance and repair and intellectual property.

The decline in the deficit was fairly broad-based across regions. Deficits with Canada and Mexico narrowed, as well as deficits with the European Union, Asia and India. The deficit with Europe narrowed the most, by 97.4%. However, about $8 billion of the narrowing came from Switzerland, which is very likely driven by gold. The deficit with Asia narrowed 16.7%; most of that outside of China.

The surplus with South America increased, mainly driven by a drop in imports from Brazil as new tariffs came online. The deficit with the African region switched to a surplus in August but was not a large mover. Deficits with other large trading partners like India and Vietnam narrowed.