Trump claims 78 per cent drop in US trade deficit; credits tariffs for economic shift

WASHINGTON: US President Donald Trump on Wednesday (local time) claimed that the nation’s trade deficit has witnessed a sharp contraction of 78 per cent. He attributed the shift to the implementation of tariffs on various firms and nations, a milestone he described as a first in many decades.

Sharing the development on Truth Social, the US President noted, “The United States trade deficit has been reduced by 78% because of the tariffs being charged to other companies and countries. It will go into positive territory during this year, for the first time in many decades”.

These assertions follow nearly a year after his administration initiated the “Liberation Day” tariffs targeting over 100 countries. While introducing these “reciprocal tariffs” on April 2, 2025, the President hailed the policy as America’s “declaration of economic independence,” with duties varying between 10 per cent and 50 per cent.

However, the US trade deficit in goods and services saw a significant rebound in November of last year, climbing to $56.8 billion, a nearly 95 per cent increase from the previous month. According to The New York Times, this surge highlights the intense volatility in trade flows as tariff policies continue to trigger sharp fluctuations.

Data released by the Commerce Department revealed that exports dropped by 3.6 per cent to $292.1 billion, while imports grew by 5 per cent in November of last year to $348.9 billion. This imbalance widened the “gap between what the United States imports and what it exports”, reversing the narrow deficit seen in October.

The New York Times noted that while Trump has lauded the earlier dip in the deficit, economists warn the decline was largely due to “temporary fluctuations in trade in certain products” such as gold. For the first 11 months of 2025, the total trade deficit actually remained 4.1 per cent higher than the previous year’s levels.

The administration’s strategy has also reconfigured partnerships. Between January and November, the US trade deficit with China reached $189 billion, falling below the deficit recorded with the European Union. The New York Times reported that the effective US tariff rate has now hit nearly 17 per cent, marking its “highest level since 1932”.

Looking ahead, the legal landscape remains uncertain as the Supreme Court is expected to rule shortly on the administration’s use of a 1970s emergency law to enact these taxes. The White House has signalled it will seek “legal workarounds” to maintain the levies if struck down. (ANI)