Please consider the U.S. International Trade in Goods and Services Report for September 2025

• September exports were $289.3 billion, $8.4 billion more than August exports. September imports were $342.1 billion, $1.9 billion more than August imports.
• The September decrease in the goods and services deficit reflected a decrease in the goods deficit of $7.1 billion to $79.0 billion and a decrease in the services surplus of $0.6 billion to $26.2 billion.
• Year-to-date, the goods and services deficit increased $112.6 billion, or 17.2 percent, from the same period in 2024. Exports increased $125.1 billion or 5.2 percent. Imports increased $237.7 billion or 7.7 percent. 

A common -- but fundamental -- misunderstanding of current trade flows.

Chinese exports are still coming to the US. They just are taking an extra stop along the way. Components go to SE Asia, Taiwan and Mexico for final assembly for the US market https://t.co/N68NNeueOr

— Brad Setser (@Brad_Setser) December 10, 2025

“A common — but fundamental — misunderstanding of current trade flows. Chinese exports are still coming to the US. They just are taking an extra stop along the way. Components go to SE Asia, Taiwan and Mexico for final assembly for the US market.“

Is Trump Succeeding at Rebalancing Trade With His Global Tariffs?

On December 8, I asked Is Trump Succeeding at Rebalancing Trade With His Global Tariffs?

it’s hard to make a case on what’s happening to non-full-year trade balances other than for China, Ireland, Taiwan, and India.

Only China shows a clear improvement. But some of the China improvement is a mirage of tariff avoidance through Vietnam, India, and Mexico.

My chart shows Taiwan was already running ahead of 2024 despite only 8 months of data. India and Vietnam appear problematic as well.

Nine Months of 2025 vs 2024 Total in Billions

• China improves from -296 to -160
• Vietnam worsens from -123 to -130
• Ireland worsens from -87 to -106
• Taiwan worsens from -74 to -94
• India worsens from -46 to -47

Four countries now have a higher deficit through September than for the full 2024 year.

Brad Setser commented “What is sent to Saigon doesn’t stay in Saigon.“

Although our trade deficit with Mexico may be improving, perhaps it isn’t. Moreover, it’s highly likely that China is also masking some exports through Mexico in addition to Vietnam, India, and Taiwan.

What Happened to Competition

They’ve almost completely abandoned it but there is no exemption slip. The price will be severe. https://t.co/lL8GJO6LJ0

— Tom Wright (@thomaswright08) December 9, 2025

Great power competition is rather expensive -- and takes a bit discipline.

Trump preferred a big beautiful ball room

(Hope I am wrong) https://t.co/GB7tVawxnZ

— Brad Setser (@Brad_Setser) December 9, 2025

Taking Credit for a Fake Victory

Administration trying to take credit for a fake victory; doesn't reflect well on Mr. Hassett's data skills.

Peter Navarro should run to the President with a copy of this chart ... https://t.co/rFUdCqD92d pic.twitter.com/DvdEArV4F2

— Brad Setser (@Brad_Setser) December 9, 2025

Projected Balance of Trade at Current Levels

(Click on image to enlarge)

The blue dashed line takes the current deficit through September, multiples by 12 and divides by 9.

Since that likely overstates the initial tariff front running, let’s try another projection method.

The BEA states “The September decrease in the goods and services deficit reflected a decrease in the goods deficit of $7.1 billion to $79.0 billion.”

Assume the improvement stabilizes (although I am skeptical there really was an improvement.) If deficits are at $79.0 billion for the last three months of the year, that would be another $237 billion.

-$982 – $237 = -$1,219.
For the full year, we are on a path to no change for all these efforts.

Meanwhile, we are destroying jobs and taxing US consumers along the way.

For discussion of Ireland and how Trump’s tax policy encourages oversees production of pharmaceuticals, please see Is Trump Succeeding at Rebalancing Trade With His Global Tariffs?

In case you missed it, please see President Trump Promised a Manufacturing Boom. Where Is It?

The answer is China.

On the home front, Powell Blames Tariffs for Inflation, Says Job Growth Is Negative

Also on the home front, I commented Health Care Inflation Bomb Makes the Fed’s 2 Percent Target Almost Impossible

Let’s discuss 2026 health care premiums and what they mean to the Fed’s preferred measure of inflation.

But all this is OK because affordability is a hoax and the US is booming.

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