The US trade deficit narrowed in January to its lowest in three months, as exports grew faster than imports.
The US trade deficit in goods and services fell to a seasonally adjusted $54.4bn in January, down from $72.9bn in December, the Bureau of Economic Analysis (BEA) reported Thursday.
The deficit in goods fell from December by $17.5bn to $81.8bn. The services surplus widened by $1bn to $27.3bn.
Compared with January 2025, the total deficit shrank by 58pc.
President Donald Trump launched a raft of tariffs on 2 April last year, "Liberation Day," citing emergency powers, before suspending the highest reciprocal tariffs in a bid to negotiate bilateral trade deals or gain leverage for sometimes unrelated deals. The ensuing uncertainty in US trading relations, along with scattershot diplomatic sorties, including lashing out at allies and adversaries alike, has scrambled supply chains, corporate investment and hiring plans and spending patterns, helping to undermine the dollar and US debt markets.
The trade-weighted dollar has depreciated by about 2pc so far this year following an 8pc depreciation last year, according to Oxford Economics. A weaker dollar supports US exports and makes imports more expensive.
The US trade deficit edged higher to $911bn last year from $904bn in 2024, with the goods deficit rising to $1.24 trillion from $1.215 trillion the prior year. The full trade deficit peaked at $923bn in 2022, up from $837bn the prior year, before falling to $774bn in 2023, according to BEA data.
Total US exports in January rose to $302bn, $15.8bn more than in December, while imports were $356bn, $2.6bn less than in December.
"Imports would normally be rising, so their recent stagnation suggests that the tariffs have depressed demand somewhat, in favor of domestic production, but the returns are minimal in the context of the pain of higher costs inflicted on businesses and households," Pantheon Macroeconomics said in a note. "The overall deficit in January was essentially unchanged from its Q4 average of $53.3B, suggesting that net trade will have little bearing in GDP growth in Q1."
Exports of goods increased on the month by $14.6bn to $195.5bn in January, while imports of goods fell by $2.8bn to $277bn.
Exports of services increased by $1.2bn to $106.7bn, and services imports rose by $23bn to $79.3bn.
Petroleum trade slows
US exports of crude and petroleum products, including natural gas liquids, fuel oil and others on an end use basis, totaled $20.6bn in January, down from $21.1bn in December, with imports at $15.5bn in January, down from $16.2bn the prior month, the report said.
Exports of crude averaged 3.9mn b/d in January, with imports at 6.1mn b/d the same month.
The US had a $19bn deficit with Vietnam in January, a $12.9bn shortfall with Mexico and a $12.5bn deficit with China, a $6.1bn deficit with the EU and a $6bn deficit with South Korea, a $5.5bn deficit with Japan and a $4.9bn shortfall with Germany. The US deficit with Canada was $2.7bn in January.
The US had a $7bn surplus with the UK, a $6.4bn surplus with the Netherlands, a $4.5bn surplus with central and south America, a $2.2bn surplus with Saudi Arabia and a $1.8bn surplus with Brazil.
For 2025, the US showed surpluses of $61bn with Netherlands, $52bn with south and central America — including $14bn with Brazil — $32bn with the UK, and $28.5bn with Hong Kong.
The average US tariff rate on imports rose to 13pc by the end of last year from 2.6pc at the beginning of the year, according to a Federal Reserve Bank of New York study released late last year. US firms and consumers bear 90pc of the economic burden from the tariffs, the New York Fed study said.
