Trump’s trade deficit was third highest on record even despite his tariffs upending the global economy, Commerce Dept. says

Fortune

by Paul Wiseman, The Associated Press

February 19, 2026

AI-Generated Deep Dive Summary

The U.S. trade deficit decreased slightly in 2025 to $901 billion from $904 billion in 2024, marking the third-highest on record despite President Donald Trump's aggressive tariff policies aimed at reducing imports. Despite widespread tariffs and a focus on goods like machinery and technology, the deficit remained significant, with imports of computer chips and tech products surging due to AI investments. While tensions with China led to a 32% drop in trade deficits with that country, trade shifted to other regions, such as Taiwan and Vietnam, where deficits doubled and increased by 44%, respectively. Economist Chad Bown warned that this shift could target countries like Taiwan and Vietnam if Trump prioritizes reducing trade imbalances over U.S.-China rivalry. Meanwhile, the U.S. trade deficit with Mexico widened to $197 billion, while the gap with Canada shrank by 26%. The U.S. is renegotiating a trade pact with both nations originally brokered by Trump. The services sector saw a surplus of $339 billion in 2025, up from $312 billion in 2024, driven by industries like banking and tourism. While tariffs initially caused a spike in imports before tax deadlines, their broader impact on inflation was less than expected. Trump defends the tariffs as essential for protecting U.S. industries and promoting manufacturing domestically. This story highlights the complexities of trade policy under Trump, emphasizing how global shifts and economic strategies can influence trade balances. For businesses, understanding these dynamics is crucial, as they shape import/export trends and investment decisions in an increasingly interconnected economy.

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Originally published on Fortune on 2/19/2026