US trade deficit widens sharply in December, testing Trump tariff claims
Trade with China remains a major driver of the US deficit, even as imports shift towards Southeast Asia and other partners
The US trade imbalance widened sharply in December 2025, highlighting continued challenges in America’s economic relationship with the world and with key economic competitor China, according to a release from the US Bureau of Economic Analysis on Thursday.
For the full year 2025, the US recorded a goods and services trade deficit of US$901.5 billion, a modest decline of 0.2 per cent from 2024, one of the largest since 1960. The total goods and services deficit in 2024 was US$903.5 billion, the report showed.
According to the new data, the US goods and services deficit rose to US$70.3 billion in December, a sharp increase of 32.6 per cent from November’s revised US$53.0 billion.
Exports fell slightly while imports increased, widening the gap as global demand shifted in the final months of the year.
Monthly exports in December were US$287.3 billion, down US$5.0 billion from November. Imports rose to US$357.6 billion, an increase of US$12.3 billion over the same period.
Although the overall US trade deficit with China has declined over the past year, China remains one of the largest sources of America’s bilateral goods trade deficit.
In December, the goods deficit with China stood at US$12.4 billion, one of the largest deficits with any single trading partner.
The figures come as global trade patterns continue to shift amid ongoing US–China tensions, and follow comments a day earlier by US President Donald Trump, who said the US trade deficit had fallen by 78 per cent as a result of tariffs.
“THE UNITED STATES TRADE DEFICIT HAS BEEN REDUCED BY 78% BECAUSE OF THE TARIFFS BEING CHARGED TO OTHER COMPANIES AND COUNTRIES,” the president said in a post on his Truth Social platform.
Recent analysis by supply-chain research firm project44 showed that US imports from China fell by about 35 per cent year-over-year in January 2026, even during the traditional Lunar New Year stockpiling period, as companies continued moving supply chains away from China and towards Southeast Asia.
Meanwhile, US exports to China have also remained weak, reflecting ongoing tariff pressures and softer demand, highlighting the uneven trade relationship between the world’s two largest economies.
For the full year 2025, US exports to China fell to US$106.3 billion, down from about US$143.2 billion in 2024. This marked a sharp drop of US$36.9 billion, or roughly 25 per cent, in a single year.
The US also ran significant trade deficits with several other Asian economies in December.
Taiwan led the list at US$19.8 billion, followed by Vietnam at US$17.6 billion, Japan at US$5.3 billion, South Korea at US$5.8 billion, India at US$5.2 billion, Malaysia at US$3.0 billion and Indonesia at US$2.3 billion.
Vietnam and Taiwan have become major manufacturing centres for electronics and components, reflecting a broader “China-plus-one” strategy by US firms seeking to reduce reliance on mainland China while maintaining access to regional supply chains.
However, these shifts have largely spread America’s trade deficit across more countries in Asia rather than reducing it overall.
While changes in Asian manufacturing drew attention, the 2025 data also showed a wider shift. For the full year, the US trade deficit with the European Union, at US$218.8 billion, was larger than its deficit with China.
Exports grew faster than imports over the year, supported in part by services such as travel, intellectual property and financial services, which helped partly offset persistent goods trade deficits, including those involving China.
The report was delayed due to a six-week federal government shutdown that began in October 2025.