The US trade deficit narrowed in June on a sharp drop in consumer goods imports, and the trade gap with China shrank to its lowest in more than 21 years, the latest evidence of the imprint on global commerce President Donald Trump is making with sweeping tariffs on imported goods.
Trump’s tariffs are leaving their mark on the US economy beyond trade, as a measure of activity in the vast services sector hit stall-speed in July, with businesses saying the swarm of new import taxes is driving up costs and making business planning more difficult.
The overall trade gap narrowed 16.0 percent in June to $60.2 billion, the Commerce Department’s Bureau of Economic Analysis said on Tuesday. Days after reporting that the goods trade deficit tumbled 10.8 percent to its lowest since September 2023, the government said the full deficit including services also was its narrowest since then.
Exports of goods and services totaled $277.3 billion, down from more than $278 billion in May, while total imports were $337.5 billion, down from $350.3 billion. Imports of consumer goods and industrial supplies and materials were both the lowest since the middle of the COVID-19 pandemic, while exports of capital goods hit a record high.
The diminished trade deficit contributed heavily to the rebound in US gross domestic product during the second quarter, reported last week, reversing a drag in the first quarter when imports had surged as consumers and businesses front-loaded purchases to beat the imposition of Trump’s tariffs.
The economy in the second quarter expanded at a 3.0 percent annualized rate after contracting at a 0.5 percent rate in the first three months of the year, but the headline figure masked underlying indications that activity was weakening.
Last week Trump, ahead of a self-imposed deadline of August 1, issued a barrage of notices informing scores of trading partners of higher import taxes set to be imposed on their goods exports to the US
With tariff rates ranging from 10 percent to 41 percent on imports to the US set to kick in on August 7, the Budget Lab at Yale now estimates the average overall US tariff rate has shot up to 18.3 percent, the highest since 1934, from between 2 percent and 3 percent before Trump returned to the White House in January.
