Ahmed Kamel – Egypt Daily News
The U.S. trade deficit fell sharply in August, declining nearly 24% as President Donald Trump’s sweeping global tariffs pushed imports lower. According to a Commerce Department report delayed by over seven weeks due to a federal government shutdown, the gap between what the United States buys from other countries and what it sells them dropped to $59.6 billion in August, down from $78.2 billion in July.
Imports of goods and services fell 5% to $340.4 billion in August, following a surge in July as U.S. companies stocked up on foreign products ahead of the tariffs, which went into effect on August 7. Exports increased slightly by 0.1% to $280.8 billion.
Trump has argued that America’s persistent trade deficits indicate that other countries have taken advantage of the U.S. economy. In response, his administration imposed broad tariffs on imports from most countries and targeted specific products such as steel, copper, and automobiles. While August’s deficit drop provides a temporary boost to economic growth, the overall U.S. trade deficit for 2025 remains elevated, totaling $713.6 billion through August, up 25% from $571.1 billion over the same period in 2024.
Economists note that a lower trade deficit can support GDP growth since spending on foreign goods is subtracted from the nation’s gross domestic product. Bill Adams, chief economist at Comerica Bank, commented that the smaller deficit in August “will be a tailwind for third quarter real GDP, as more U.S. expenditures were directed toward domestically produced goods and services rather than foreign ones.” He added that the report, though delayed, contributes to evidence of brisk economic growth in the third quarter.
While tariffs are intended to protect U.S. industries and encourage domestic manufacturing, they often lead to higher prices as importers pass on costs to consumers. Economists point to tariffs as a factor in persistent U.S. inflation above the Federal Reserve’s 2% target. Following public dissatisfaction with rising prices, Trump recently lifted tariffs on products such as beef, coffee, tea, fruit juice, cocoa, spices, bananas, oranges, tomatoes, and certain fertilizers, acknowledging they may have contributed to higher costs.
The president’s tariffs also face legal challenges, with the Supreme Court hearing arguments on November 5. Justices expressed skepticism over whether the president has the authority to bypass Congress and impose unlimited tariffs on imports by declaring a national emergency.
