US trade deficit swells in December as imports surge | Trade War News
U.S. Trade Deficit Widens as Imports Surge
The United States trade deficit grew significantly in December, marking the second consecutive month of decline, primarily due to increased imports of computer chips and other technology products. This rise in imports has contributed to the largest goods shortfall on record for 2025, despite President Donald Trump’s tariffs on foreign goods.
According to the U.S. Commerce Department, the trade deficit widened by 32.6% to a five-month high of $70.3 billion, diverging from economists’ forecasts of a contraction to $55.5 billion. The report, which experienced delays due to last year’s government shutdown, highlighted the minimal contribution of trade to the nation’s gross domestic product in the fourth quarter.
Data reveals that exports grew by 6% last year, while imports rose by nearly 5%. However, the goods trade deficit reached an unprecedented $1.24 trillion for the year, largely driven by American firms increasing imports from Taiwan to support investments in artificial intelligence.
In a notable shift, the deficit in trade with China decreased by nearly 32% to $202 billion, following substantial declines in both imports and exports to the country. Conversely, the trade gap with Taiwan doubled to $147 billion, and the deficit with Vietnam surged by 44% to $178 billion, indicating a reallocation of trade routes amidst ongoing tensions with Beijing.
Despite the imposition of tariffs aimed at correcting trade imbalances and protecting U.S. industries, manufacturing employment has fallen. Approximately 83,000 factory jobs were lost between January 2025 and January 2026. Chad Bown, a senior fellow at the Peterson Institute for International Economics, noted a lack of evidence supporting the effectiveness of tariffs in significantly impacting trade deficits historically.
In December alone, imports climbed by 3.6% to $357.6 billion, with goods imports rising by 3.8% to $280.2 billion. Contributing factors included a $7 billion increase in industrial supplies and materials, particularly non-monetary gold, copper, and crude oil. Capital goods imports also rose by $5.6 billion, largely driven by increased demand for computer accessories and telecommunications equipment related to data center construction for artificial intelligence.
Meanwhile, imports of consumer goods fell, notably in pharmaceutical preparations, which have seen volatility due to tariffs. Veronica Clark, an economist at Citigroup, explained that strong import figures may indicate robust business investment and inventory growth, suggesting a link between surging computer imports and increased business equipment investment driven by demand related to AI.
Exports, however, experienced a slight decline of 1.7% to $287.3 billion in December, although capital goods exports—including semiconductors—rose, along with consumer goods exports, particularly pharmaceuticals.
