US Trade Deficit Shrinks to Two-Year Low

The U.S. goods trade deficit narrowed by 10.8% to $86 billion in June 2025, its lowest point in nearly two years, as imports dropped 4.2% to $264.2 billion—the weakest level since early 2024. The decline followed an earlier import surge as businesses tried to get ahead of new tariffs imposed by the Trump administration, which has also promoted domestic production through its trade policy. While the shrinking deficit is expected to boost second-quarter GDP, it reflects slowing domestic demand and points to ongoing supply chain volatility. Economists highlighted the steep fall in consumer goods imports and noted that policy uncertainty continues to complicate business planning, though recent trade deals may help provide stability. Despite the improvement, concerns persist about a softening labor market and an uneven economic recovery. The administration's protectionist tariff strategy has driven the deficit reduction but raises questions about the sustainability of economic momentum.