Image Source: Unsplash

Most Trump boasts, like ending 10 wars, $20 trillion in foreign investment, or falling prices, are complete fabrications that correspond to nothing in the real world. But Trump (and/or his team) do occasionally come up with something that has at least some basis in reality. The claim that the trade deficit fell sharply in September fits into this category.

Real world fans can see that in fact the trade deficit was down sharply in September. It came in at $52.8 billion, down from $59.3 billion in August, and $81.5 billion in September of last year. Needless to say, Team Trump was eagerly boasting about this number shortly after the Census Bureau released it. 

But even when there is some real-world basis for a Trump boast, it is usually necessary to look a bit more closely to see how much there is there. In the trade deficit story, there is much less than advertised. 

There is no doubt that the trade deficit has fallen sharply under Trump, undoubtedly in large part due to his tariffs. But the deficit also exploded earlier in the year, also due to Trump’s tariffs. 

Source: Census Bureau.

As can be seen, the trade deficit jumped from an average of $72.7 billion a month in the first ten months of 2024 to a peak of $136.4 billion in March of this year. The rise in the trade deficit was due to people rushing to buy imported goods before Trump’s tariffs hit. (I left November and December out of the average because the rush to import began right after the election.)  

In anticipation of tariffs making goods more expensive, many consumers rushed to buy imported cars, appliances, or other big-ticket items. Similarly, businesses filled their inventories with steel, lumber, and other inputs, knowing that the prices would be much higher after Tariff Man got to work.

The stockpiling from the winter and spring is relevant to the low September trade deficit for the obvious reason that if inventories are still full, businesses have less need to import now. Similarly, if someone bought a foreign car in February or March, they are not about to buy another one in September.

If we want a more serious assessment of where things stand on the trade deficit, we can take the year to date and compare it to last year. This comparison goes the wrong way for the Trump celebrants. The 2025 cumulative deficit through September was $765.1 billion. For the first nine months of 2024 it was $652.6 billion. This means that, thus far, Trump’s trade deficit is more than $110 billion higher than Biden’s trade deficit for the same months. That’s not something that fans of balanced trade should be celebrating.

To be clear, most economists would agree that high tariffs will eventually lower the trade deficit, although the mechanism could be that lower growth will reduce imports. That’s probably not an outcome most people would view as a good thing. 

Also, as many of us have pointed out, there is no obvious reason we should want balanced trade. The trade deficit means foreigners are investing in the United States. That is not a bad thing. 

But that’s a debate we can have another time. The main point for now is that the Trump gang is celebrating their own confusion, not real evidence that Trump’s tariffs have led to major reduction in the trade deficit. 

More By This Author: