The U.S. saw a big drop in its trade deficit in August, falling almost 24%. This happened as President Trump’s tariffs on goods coming into the country led to fewer imports.
The Commerce Department said that the difference between what the U.S. buys from other countries and what it sells to them went down to $59.6 billion in August, a significant decrease from $78.2 billion in July.
Imports of goods and services decreased by 5% to $340.4 billion in August. This happened after U.S. companies stocked up on foreign products in July before Trump’s tariffs on goods from many countries took effect on August 7.
U.S. exports saw a slight increase of 0.1% in August, reaching $280.8 billion.
President Trump has argued that America’s trade deficits mean other countries have been taking advantage of the U.S. He has challenged decades of free trade policies by imposing tariffs on imports from most countries, targeting specific products like steel and cars.
Even with the August drop, the U.S. trade deficit is still up for the year, totaling $713.6 billion through August, which is 25% higher than the $571.1 billion from the same period last year.
A smaller trade deficit can help the economy grow because it means more money is being spent on goods and services made in the U.S.
Some experts believe the smaller trade deficit will help the economy grow in the third quarter.
President Trump says tariffs will help American industries and bring factories back to the U.S. However, businesses that import goods often pass the cost of tariffs on to consumers. Some economists believe that Trump’s tariffs are contributing to inflation.
After voters showed their concern about the high cost of living in recent elections, President Trump reduced tariffs on some goods like beef, coffee, and certain fertilizers.
President Trump’s ability to impose tariffs is facing a legal challenge. The Supreme Court seemed unsure if the President has the power to bypass Congress and impose tariffs on most imports simply by declaring a national emergency.
