US trade deficit narrows sharply in August in boost to third-quarter GDP

Source: Reuters

November 19, 2025 11:26 AM EST Updated 6 hours ago


WASHINGTON, Nov 19 (Reuters) - The U.S. trade deficit narrowed more than expected in August as businesses imported fewer goods against the backdrop of higher tariffs, a trend that if sustained could be a potential tailwind for economic growth in the third quarter.

But a drop in consumer goods imports to levels last seen early in the COVID-19 pandemic and a decline in capital goods imports, including computer accessories and telecommunications equipment reported by the Commerce Department on Wednesday, could signal slower consumer and business spending last quarter.

President Donald Trump has imposed sweeping tariffs on the nation's trade partners, accusing them of taking advantage of the United States. The U.S. Supreme Court early this month heard arguments on the legality of Trump's import duties, with justices raising doubts about his authority to impose tariffs under the 1977 International Emergency Economic Powers Act.

"The good news for trade and the U.S. economy is the tariffs are working," said Christopher Rupkey, chief economist at FWDBONDS. "The bad news for trade and the U.S. economy is the tariffs are working. Markets and Federal Reserve officials will scramble to find which is true, but maybe both are." The trade gap contracted 23.8% to $59.6 billion, the Commerce Department's Bureau of Economic Analysis and Census Bureau said on Wednesday. Economists polled by Reuters had forecast the trade deficit would ease to $61.0 billion. The report, which was initially scheduled for release on October 7, was delayed because of the recently ended 43-day shutdown of the government.

Read more: https://www.reuters.com/business/us-trade-deficit-narrows-sharply-august-imports-fall-2025-11-19/