Bloomberg — The U.S. trade deficit narrowed in January as exports rose, after a turbulent year for domestic importers who faced erratic tariff policy.
The trade deficit in goods and services was reduced by more than 25% compared to the previous month, reaching US$54.5 billion, according to Commerce Department data published Thursday. The median estimate in a Bloomberg survey of economists called for a deficit of $66 billion.
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Exports rose 5.5% in January from the previous month, boosted by shipments of nonmonetary gold and other precious metals, as well as computers and aircraft. Total imports fell 0.7%, reflecting a decline in pharmaceutical products.
Last year, trade flows experienced large monthly fluctuations due to the reaction of American importers to a series of tariff announcements by President Donald Trump. His administration has sought to implement higher import tariffs as part of a policy aimed at reducing dependence on foreign goods, encouraging domestic investment and reversing decades of decline in the manufacturing industry.
Tariff rates did not change in January, but that was before the U.S. Supreme Court struck down many of Trump’s tariffs on Feb. 20, prompting the president to impose them using different authorities.
Bloomberg Economics said a key question for 2026 is whether retailers will replenish their inventories. increasing imports or prioritizing national production. Meanwhile, the war in Iran, launched by the United States and Israel on February 28, could also affect shipping and trade with Middle Eastern countries.
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The latest trade data will help economists solidify their estimates for first-quarter gross domestic product (GDP). Before the numbers, the Federal Reserve Bank of Atlanta’s GDPNow forecast indicated that net exports could subtract half a percentage point from first-quarter GDP. Net exports barely contributed to growth in the fourth quarter.
On an inflation-adjusted basis, which filters into the measurement of real GDP, the merchandise trade deficit narrowed to $83.9 billion in January.
The deficit with China widened slightly compared to the previous month, after having been reduced last year to its lowest level in more than two decades. The gap with Vietnam reached a record, while deficits with Canada and Mexico narrowed.
Separate data released Thursday showed little change in initial jobless claims last week, while housing starts rose in January due to new construction of multifamily projects.
Read more at Bloomberg.com
