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US Trade Gap Narrowed in January by More Than Projected
Commerce Department Reports $54.5 Billion Deficit
The U.S. trade deficit narrowed in January as exports increased, coming off of a turbulent year for domestic importers contending with erratic tariff policy.
The gap in goods and services trade shrank more than 25% from the prior month to $54.5 billion, Commerce Department data showed March 12. The median estimate in a Bloomberg survey of economists called for a $66 billion deficit.
Exports increased 5.5% in January from the prior month, fueled by outbound shipments of nonmonetary gold and other precious metals, as well as computers and aircraft. Overall imports fell 0.7%, reflecting a decline in pharmaceuticals.
Trade flows last year were subject to large monthly swings as U.S. importers reacted to a slew of tariff announcements from President Donald Trump. His administration has attempted to use higher import duties as part of a policy aimed at reducing reliance on foreign goods, encouraging domestic investment and reversing decades of manufacturing decline.
Tariff rates were unchanged in January, but that was before the Supreme CourtÌýstruck downÌýmany of Trump’s tariffs on Feb. 20, prompting the president toÌýimpose themÌýusing different authorities.
January trade deficit at $54.5B vs. $66B est. & $72.9B prior (rev up from $70.3B) … imports -0.7% m/m; exports +5.5% — Liz Ann Sonders (@LizAnnSonders)
Bloomberg Economics said a key question for 2026 is whether retailers will rebuild inventories by ramping up imports or shifting toward domestic production. Meanwhile, the war in Iran launched by the U.S. and Israel on Feb. 28 also stands to affect shipping and trade with Middle East countries.
The latest trade data will help economists firm up their estimates for first-quarter gross domestic product. Before the figures, the Federal Reserve Bank of Atlanta’s GDPNowÌýforecastÌýindicated net exports may subtract a half percentage point from first-quarter GDP. Net exports barely added to growth in the fourth quarter.
On an inflation-adjusted basis, which filters into the real GDP measurement, the merchandise trade deficit narrowed to $83.9 billion in January.
Applications for US unemployment benefits edged down last week as initial claims decreased by 1,000 to 213,000 and the US trade deficit narrowed in January as exports increased.
Michael McKee breaks down the data — Bloomberg TV (@BloombergTV)
The deficit with China widened slightly from a month earlier after narrowing last year toÌýthe smallest in more than two decades. The gap with Vietnam widened to a record, while the shortfalls with Canada and Mexico shrank.
Separate data out March 12 showed little change in initial jobless claims last week, whileÌýhousing startsÌýclimbed in January on new construction of multifamily projects.
