Topline
The U.S. trade deficit narrowed more than expected in August, according to delayed Commerce Department data released Wednesday, as President Donald Trump’s tariffs appeared to disrupt international commerce.
Key Facts
The U.S. trade deficit—the value by which the cost of a country’s imports is worth more than its exports—shrank to $59.6 billion in August, the narrowest gap since October 2023 ($58.3 billion), the Bureau of Economic Analysis reported Wednesday.
That marks a 24% reduction from July ($78.2 billion) as imports declined by 5.1%, the most in four months, and exports rose by just 0.1%, according to the agency.
Wall Street expected the trade gap to narrow to $60.3 billion, according to FactSet.
Trump announced wide-reaching tariffs on U.S. trade partners in April before expanding on the levies in August, raising the effective tariff rate imposed by the U.S. to 18%, according to the Budget Lab at Yale, while also resulting in a widening of the trade deficit as imports increased.
How Much Do Exports Contribute To U.s. Economic Growth?
The Federal Reserve of Atlanta expects the U.S. gross domestic product to increase by 4.2% in the third quarter, with exports accounting for up to 0.78 percentage points. The GDP increased by 3% in the second quarter, ahead of a Dow Jones consensus of 2.3%, as exports and imports fell by 1.8% and 30.3%, respectively.