Key Points:
- The December trade deficit jumped over 32% to $70.3 billion.
- The gap for physical goods hit an all-time high in 2025.
- Imports surged due to demand for AI equipment and industrial supplies.
- Factory jobs declined by 83,000 despite aggressive new tariffs.
The United States bought far more from other countries than it sold in December, causing the trade deficit to widen sharply. According to the Commerce Department, the gap ballooned by 32.6% to hit $70.3 billion. This number surprised experts, as economists had predicted the deficit would actually shrink to around $55.5 billion.
The data for the full year of 2025 paints a difficult picture for the administration’s economic policy. The deficit for physical goods—stuff you can touch like cars, oil, and electronics—widened to $1.24 trillion. This is the highest level on record. The numbers suggest that President Donald Trump’s aggressive tariffs on foreign products failed to close the gap or bring manufacturing dominance back to American shores.
In fact, the manufacturing sector seems to be struggling. Despite the taxes on imports meant to protect U.S. industries, factory employment dropped. The sector lost 83,000 jobs between January 2025 and January 2026. The “manufacturing renaissance” the White House promised has not yet appeared in the hiring data.
A surge in imports drove the December numbers. American businesses brought in 3.6% more goods, totaling $357.6 billion. A large chunk of this increase came from industrial supplies like crude oil, copper, and non-monetary gold. Technology also played a major role. Companies imported $5.6 billion more in capital goods, specifically computer accessories and telecom gear needed to build data centers for artificial intelligence.
While Americans bought more, they sold less. Exports fell by 1.7% in December. The U.S. shipped out fewer industrial supplies, though semiconductor exports did see a bump. Because a high trade deficit subtracts from a country’s total economic growth, economists warn that this report could hurt the fourth-quarter GDP numbers scheduled for release this Friday.
