The U.S. goods deficit with China fell by roughly $2 billion in September, coming in at $15.03 billion. China has dropped to fourth place in terms of the countries in which the U.S. has its biggest goods gap. Ireland (-$18.22 billion), a go-to manufacturing hub for branded pharmaceutical drugs; Mexico (-$17.38 billion), the biggest manufacturing power with a free trade agreement still intact; and Vietnam ($16.6 billion deficit), an outpost for Chinese and other multinationals, have all surpassed China in September, based on trade data released Thursday by the Bureau of Economic Analysis (BEA).
By comparison, our goods trade deficit with China in September 2024 was $31.8 billion, twice that of Mexico and three times that of Vietnam.
The overall goods deficit for September was $78.98 billion, marking the tightest gap for the goods trade all year. For instance, the trade deficit was $86 billion in August, tightening from the $102.72 billion in July, the last month of the 90-day pause on the “Liberation Day” tariffs imposed worldwide in early April.
August was essentially Month No. 1 for the full brunt of Trump’s use of the International Emergency Economic Powers Act (IEEPA) to increase tariff rates in the name of “reciprocity.” September was Month No. 2, and we are able to see the impact clearly now from those tariffs on imports.
Keep in mind that importers essentially front loaded tariffs in January, February, and March in expectation of the April tariff announcement. They imported heavily again in the summer ahead of the IEEPA tariffs in August. That means the U.S. deficit has already blown through the $1 trillion mark and will likely end the year at a little over $1.1 trillion. The U.S. recorded a record $1.21 trillion goods trade deficit in 2024.
Despite tariffs, companies are importing as usual. This is due to a number of factors, including the uncertainty over tariff stickiness. The IEEPA tariffs may be deemed illegal by the Supreme Court in January, wiping out all tariffs except the sectoral Section 232 tariffs. Companies that are moving supply chains out of Asia are either slowly reshoring, or sourcing more from Mexico as our deficit there suggests. The other reason is the perennial headwind for companies competing with imports – the dollar. While the dollar is a little weaker this year (down versus the euro and Mexican peso), it is still much stronger than the peso and the Vietnamese dong, which has lost value this year.
The dollar weakened against the peso, yuan and euro this year. The dollar continues to gain in strength versus the Vietnamese dong. Still, despite a tighter forex, a dollar simply goes much farther in Mexico and Asia than it does at home.
America’s Top Exports
Although headlines make it appear as if Boeing aircraft, soybeans, and LNG are America’s top, and most important exports, nothing compares to pharmaceuticals.
September export values for pharma was $12.7 billion, compared to $5.3 billion in civilian aircraft, $2.8 billion in liquefied natural gas, and $1.8 billion in soybeans.
Despite this high number, the U.S. imports even more pharmaceuticals than it exports and September was no exception. Pharma imports totaled $28.14 billion, nearly double the $15.28 billion in August.
Worth noting, the Section 232 tariffs on cars and car parts largely exempts the USMCA zone. The U.S. imported $13.14 billion worth of passenger cars in September and we exported only $4.39 billion. This is mostly because car makers here produce for the local market. But as imports rise, those local producers eventually lose market share even if it is the same company producing the car abroad.
The only serious trade surplus the U.S. has is in aerospace, which includes things like satellites. The U.S. recorded a $10.8 billion surplus in aerospace in September, continuing a year long trend in that segment of advanced technologies.
However, in the BEA’s list of advanced technology goods, the aerospace surplus is completely wiped out by biotechnology imports. We have yet another monthly deficit in biotech, with September’s deficit coming in at $13.44 billion.
Commodity Deficits Remain
The U.S. is a commodity super power, we keep being told. We have ample fossil fuel and food.
But a closer look at the numbers reveals that U.S. production is not enough in some segments of the commodity markets. While some items are in surplus – namely natural gas and petroleum products – we do see broader deficits across agricultural commodities.
The U.S. has a roughly $30 billion deficit in agricultural commodities year-to-date ending September. The U.S. exported $13.46 billion worth of ag goods in September, but imported $15.9 billion. This number includes a roughly $300 million monthly deficit in animal proteins, a $1.2 billion monthly deficit in seafood, and a $2 billion deficit in fruits and vegetables – and this number is during harvest season for many of those items.
“After all the tariff front-running and pre-positioning by importers in the early part of the year, we are approaching something like normality in our trade profile, and goods imports in Q3 were 2.7% lower in those three months than a year earlier, despite GDP up a likely 4%, so that indicates that imports are being held in check,” said CPA chief economist emeritus Jeff Ferry. “On the other hand, imports of three categories of goods related to the AI boom, computers, computer accessories and telecom equipment, were up 48% at $331.7 billion in the first nine months of the year, and these imports are likely to rise further in 2026. We need industry-specific, focused reshoring efforts to move some of this production onshore.”
EU Deficit Bigger Than USMCA?
The recent release of the National Security Strategy of the United States had the Europeans up in arms. Without examining their core complaints and Europe-related matters in that report, the European Union, and Europe more broadly, despite having a stronger currency at the moment, are a bigger source of the goods deficit than Mexico and Canada combined.
Year-to-date, the U.S.-European Union deficit is $173.58 billion. The deficit with all of Europe is $188.45 billion, versus a $169.41 billion deficit with Mexico and Canada.
The EU surplus with the U.S. is second only to China’s surplus. At the current rate of de-risking and de-coupling, the EU will surpass China as the leading source of the deficit within two years.
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.
U.S. Trade Deficit With China Shrinks In September; But Mexico, Vietnam, and Ireland Goods Gap Surpasses It
The U.S. goods deficit with China fell by roughly $2 billion in September, coming in at $15.03 billion. China has dropped to fourth place in terms of the countries in which the U.S. has its biggest goods gap. Ireland (-$18.22 billion), a go-to manufacturing hub for branded pharmaceutical drugs; Mexico (-$17.38 billion), the biggest manufacturing power with a free trade agreement still intact; and Vietnam ($16.6 billion deficit), an outpost for Chinese and other multinationals, have all surpassed China in September, based on trade data released Thursday by the Bureau of Economic Analysis (BEA).
By comparison, our goods trade deficit with China in September 2024 was $31.8 billion, twice that of Mexico and three times that of Vietnam.
The overall goods deficit for September was $78.98 billion, marking the tightest gap for the goods trade all year. For instance, the trade deficit was $86 billion in August, tightening from the $102.72 billion in July, the last month of the 90-day pause on the “Liberation Day” tariffs imposed worldwide in early April.
August was essentially Month No. 1 for the full brunt of Trump’s use of the International Emergency Economic Powers Act (IEEPA) to increase tariff rates in the name of “reciprocity.” September was Month No. 2, and we are able to see the impact clearly now from those tariffs on imports.
Keep in mind that importers essentially front loaded tariffs in January, February, and March in expectation of the April tariff announcement. They imported heavily again in the summer ahead of the IEEPA tariffs in August. That means the U.S. deficit has already blown through the $1 trillion mark and will likely end the year at a little over $1.1 trillion. The U.S. recorded a record $1.21 trillion goods trade deficit in 2024.
Despite tariffs, companies are importing as usual. This is due to a number of factors, including the uncertainty over tariff stickiness. The IEEPA tariffs may be deemed illegal by the Supreme Court in January, wiping out all tariffs except the sectoral Section 232 tariffs. Companies that are moving supply chains out of Asia are either slowly reshoring, or sourcing more from Mexico as our deficit there suggests. The other reason is the perennial headwind for companies competing with imports – the dollar. While the dollar is a little weaker this year (down versus the euro and Mexican peso), it is still much stronger than the peso and the Vietnamese dong, which has lost value this year.
America’s Top Exports
Although headlines make it appear as if Boeing aircraft, soybeans, and LNG are America’s top, and most important exports, nothing compares to pharmaceuticals.
September export values for pharma was $12.7 billion, compared to $5.3 billion in civilian aircraft, $2.8 billion in liquefied natural gas, and $1.8 billion in soybeans.
Despite this high number, the U.S. imports even more pharmaceuticals than it exports and September was no exception. Pharma imports totaled $28.14 billion, nearly double the $15.28 billion in August.
Worth noting, the Section 232 tariffs on cars and car parts largely exempts the USMCA zone. The U.S. imported $13.14 billion worth of passenger cars in September and we exported only $4.39 billion. This is mostly because car makers here produce for the local market. But as imports rise, those local producers eventually lose market share even if it is the same company producing the car abroad.
The only serious trade surplus the U.S. has is in aerospace, which includes things like satellites. The U.S. recorded a $10.8 billion surplus in aerospace in September, continuing a year long trend in that segment of advanced technologies.
However, in the BEA’s list of advanced technology goods, the aerospace surplus is completely wiped out by biotechnology imports. We have yet another monthly deficit in biotech, with September’s deficit coming in at $13.44 billion.
Commodity Deficits Remain
The U.S. is a commodity super power, we keep being told. We have ample fossil fuel and food.
But a closer look at the numbers reveals that U.S. production is not enough in some segments of the commodity markets. While some items are in surplus – namely natural gas and petroleum products – we do see broader deficits across agricultural commodities.
The U.S. has a roughly $30 billion deficit in agricultural commodities year-to-date ending September. The U.S. exported $13.46 billion worth of ag goods in September, but imported $15.9 billion. This number includes a roughly $300 million monthly deficit in animal proteins, a $1.2 billion monthly deficit in seafood, and a $2 billion deficit in fruits and vegetables – and this number is during harvest season for many of those items.
“After all the tariff front-running and pre-positioning by importers in the early part of the year, we are approaching something like normality in our trade profile, and goods imports in Q3 were 2.7% lower in those three months than a year earlier, despite GDP up a likely 4%, so that indicates that imports are being held in check,” said CPA chief economist emeritus Jeff Ferry. “On the other hand, imports of three categories of goods related to the AI boom, computers, computer accessories and telecom equipment, were up 48% at $331.7 billion in the first nine months of the year, and these imports are likely to rise further in 2026. We need industry-specific, focused reshoring efforts to move some of this production onshore.”
EU Deficit Bigger Than USMCA?
The recent release of the National Security Strategy of the United States had the Europeans up in arms. Without examining their core complaints and Europe-related matters in that report, the European Union, and Europe more broadly, despite having a stronger currency at the moment, are a bigger source of the goods deficit than Mexico and Canada combined.
Year-to-date, the U.S.-European Union deficit is $173.58 billion. The deficit with all of Europe is $188.45 billion, versus a $169.41 billion deficit with Mexico and Canada.
The EU surplus with the U.S. is second only to China’s surplus. At the current rate of de-risking and de-coupling, the EU will surpass China as the leading source of the deficit within two years.
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.
TRENDING
CPA Applauds U.S. Senate’s Final Passage of the ‘National Defense Authorization Act for FY2026’
China’s Automotive Market Deemed Existential Threat, With Worries Washington Can’t Count on EU for Help
U.S. Trade Deficit With China Shrinks In September; But Mexico, Vietnam, and Ireland Goods Gap Surpasses It
Trans-Alaskan Pipeline To Be Made-in-Korea Steel — CPA Raises Concern and Alarm
China’s Beating America to the Moon. Witnesses Tell House Space Committee Needs More Government Action.
The latest CPA news and updates, delivered every Friday.
WATCH: WORTH FIGHTING FOR
Get the latest in CPA news, industry analysis, opinion, and updates from Team CPA.
CHECK OUT THE NEWSROOM ➔