The trade deficit fell 16% in June to a low $60.2 billion, the Bureau of Economic Analysis said on Tuesday, but despite a 3.7% reduction in imports, the goods deficit for the month was surprisingly resilient compared to recent years without tariffs.
The June goods deficit number was $85.87 billion – the lowest figure on the year – though that trade gap for the month is not much different than the summer months of 2023. Back then, President Trump was not exactly looking like a shoo-in to win back the White House. There were no new tariffs, and yet, the trade deficits back then were $88 billion in June and July and $84 billion in August. The June 2025 figure indicates that despite the global 10% tariff and roughly 55% tariffs on China, following the Geneva and London trade agreements, imports were not wrecked as many suggested.
All told, the goods deficit for the year is $735.44 billion, up from $577.30 billion in the same period of 2024. This is all due to massive import spikes in January, February and March prior to the April 2 “Liberation Day” tariffs, officially known as the International Economic Emergency Powers Act (IEEPA) tariffs. Those months saw record goods deficits of more than $140,000 per month.
One big takeaway from the data – the June goods deficit with China fell to a monthly rate not seen in 21 years.
Derisking: U.S. Deficit With China Keeps Shrinking
Tariffs and other geopolitical strains on the U.S.-China relationship has tightened the goods deficit with them, coming in at just $9.50 billion for June. The last time the goods gap between the U.S. and China was that low was in August 2004; it was $8.33 billion.
The goods deficit with China for the year is $111.46 billion. It will likely end the year around $230 billion. The last time the goods deficit with China was that low was 2009.
As a stand-alone country, our goods deficit with China is bigger than any other trading partner.
Since tariffs were imposed under Section 301 back in 2018, China has increased outsourcing and investment into Vietnam. It now rivals Mexico as an import source.
Country
June 2025
May 2025
Deficit Year-to-Date
Mexico
$16.77 billion
$18.16 billion
$96.21 billion
Vietnam
$16.51 billion
$14.72 billion
$81.32 billion
Taiwan
$12.62 billion
$11.65 billion
$56.22 billion
China
$9.50 billion
$13.94 billion
$111.46 billion
Thailand
$6.19 billion
$5.22 billion
$28.91 billion
NOTE: Ranked in order of monthly deficit value.
Asia remains the go-to spot for manufactured goods thanks to labor costs lower than Mexico and China, and undervalued currencies. A hundred dollars will mint you a Vietnamese millionaire as $100 is equal to 2.6 million dong. GDP per capita in Vietnam is around $4,000, less than half a month’s pay of a middle class American in most states.
Top Deficit Items. Did the EU, Japan and South Korea Export Fewer Cars?
Despite tariffs on cars – mainly from Europe, Japan and South Korea – the U.S. imported $15.03 billion worth of passenger cars. This is an average number for car imports, actually. We are not seeing any major declines. Numbers would have to fall below $10 billion to suggest a noticeable slowdown. Cars and car parts sourced from Mexico and Canada that abide by North American content requirements are still allowed into the U.S. duty-free.
Section 232 tariffs on cars were already in effect in May.
Passenger Cars From:
June 2025
May 2025
Year-to-Date Imports
Mexico
$4.12 billion
$3.99 billion
$22.12 billion
Japan
$3.12 billion
$3.00 billion
$19.86 billion
South Korea
$2.72 billion
$2.91 billion
$16.41 billion
Canada
$1.86 billion
$2.16 billion
$13.16 billion
Germany
$1.44 billion
$2.07 billion
$11.2 billion
NOTE: Import values from the leading passenger vehicle sources.
Pharmaceutical imports also look healthy. The U.S. imported $17.11 billion in June. This is down from $26.7 billion in May, likely due to the announcement of the Section 232 investigation into pharmaceutical imports. For the year, the U.S. spent $176.30 billion on generic and branded drug imports, which is way up from the same period last year when import values were $115.08 billion.
Not surprisingly, and thanks to tariff front-running in the first quarter of 2025, the U.S. goods and services trade deficit with every major trading partner is up versus the first quarter of 2024, led by Vietnam. The deficit with Vietnam is up around $12 billion in 1Q25 vs 1Q24, followed by a roughly $10 billion increase in the quarterly deficit with China.
MADE IN AMERICA.
CPA is the leading national, bipartisan organization exclusively representing domestic producers and workers across many industries and sectors of the U.S. economy.
Trade Deficit Falls 16%, But Goods Deficit Surprisingly Resilient
The trade deficit fell 16% in June to a low $60.2 billion, the Bureau of Economic Analysis said on Tuesday, but despite a 3.7% reduction in imports, the goods deficit for the month was surprisingly resilient compared to recent years without tariffs.
The June goods deficit number was $85.87 billion – the lowest figure on the year – though that trade gap for the month is not much different than the summer months of 2023. Back then, President Trump was not exactly looking like a shoo-in to win back the White House. There were no new tariffs, and yet, the trade deficits back then were $88 billion in June and July and $84 billion in August. The June 2025 figure indicates that despite the global 10% tariff and roughly 55% tariffs on China, following the Geneva and London trade agreements, imports were not wrecked as many suggested.
All told, the goods deficit for the year is $735.44 billion, up from $577.30 billion in the same period of 2024. This is all due to massive import spikes in January, February and March prior to the April 2 “Liberation Day” tariffs, officially known as the International Economic Emergency Powers Act (IEEPA) tariffs. Those months saw record goods deficits of more than $140,000 per month.
One big takeaway from the data – the June goods deficit with China fell to a monthly rate not seen in 21 years.
Derisking: U.S. Deficit With China Keeps Shrinking
Tariffs and other geopolitical strains on the U.S.-China relationship has tightened the goods deficit with them, coming in at just $9.50 billion for June. The last time the goods gap between the U.S. and China was that low was in August 2004; it was $8.33 billion.
The goods deficit with China for the year is $111.46 billion. It will likely end the year around $230 billion. The last time the goods deficit with China was that low was 2009.
As a stand-alone country, our goods deficit with China is bigger than any other trading partner.
Since tariffs were imposed under Section 301 back in 2018, China has increased outsourcing and investment into Vietnam. It now rivals Mexico as an import source.
Country
June 2025
May 2025
Deficit Year-to-Date
Mexico
$16.77 billion
$18.16 billion
$96.21 billion
Vietnam
$16.51 billion
$14.72 billion
$81.32 billion
Taiwan
$12.62 billion
$11.65 billion
$56.22 billion
China
$9.50 billion
$13.94 billion
$111.46 billion
Thailand
$6.19 billion
$5.22 billion
$28.91 billion
NOTE: Ranked in order of monthly deficit value.
Asia remains the go-to spot for manufactured goods thanks to labor costs lower than Mexico and China, and undervalued currencies. A hundred dollars will mint you a Vietnamese millionaire as $100 is equal to 2.6 million dong. GDP per capita in Vietnam is around $4,000, less than half a month’s pay of a middle class American in most states.
Top Deficit Items. Did the EU, Japan and South Korea Export Fewer Cars?
Despite tariffs on cars – mainly from Europe, Japan and South Korea – the U.S. imported $15.03 billion worth of passenger cars. This is an average number for car imports, actually. We are not seeing any major declines. Numbers would have to fall below $10 billion to suggest a noticeable slowdown. Cars and car parts sourced from Mexico and Canada that abide by North American content requirements are still allowed into the U.S. duty-free.
Section 232 tariffs on cars were already in effect in May.
Passenger Cars From:
June 2025
May 2025
Year-to-Date Imports
Mexico
$4.12 billion
$3.99 billion
$22.12 billion
Japan
$3.12 billion
$3.00 billion
$19.86 billion
South Korea
$2.72 billion
$2.91 billion
$16.41 billion
Canada
$1.86 billion
$2.16 billion
$13.16 billion
Germany
$1.44 billion
$2.07 billion
$11.2 billion
NOTE: Import values from the leading passenger vehicle sources.
Pharmaceutical imports also look healthy. The U.S. imported $17.11 billion in June. This is down from $26.7 billion in May, likely due to the announcement of the Section 232 investigation into pharmaceutical imports. For the year, the U.S. spent $176.30 billion on generic and branded drug imports, which is way up from the same period last year when import values were $115.08 billion.
Not surprisingly, and thanks to tariff front-running in the first quarter of 2025, the U.S. goods and services trade deficit with every major trading partner is up versus the first quarter of 2024, led by Vietnam. The deficit with Vietnam is up around $12 billion in 1Q25 vs 1Q24, followed by a roughly $10 billion increase in the quarterly deficit with China.
MADE IN AMERICA.
CPA is the leading national, bipartisan organization exclusively representing domestic producers and workers across many industries and sectors of the U.S. economy.
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