The U.S. trade deficit dropped nearly 24% in August as President Donald Trump’s broad tariffs on global imports drove down purchases from other countries.

The Commerce Department reported Wednesday that the gap between U.S. imports and exports fell to $59.6 billion in August from $78.2 billion in July. The report, delayed more than seven weeks due to a federal government shutdown, showed imports of goods and services declined 5% to $340.4 billion, following a July surge when companies stocked up ahead of Trump’s tariffs, which took effect on Aug. 7. Exports edged up 0.1% to $280.8 billion.

Trump has long argued that persistent trade deficits reflect foreign countries taking advantage of the U.S., prompting him to abandon decades of free-trade policy and impose double-digit tariffs on most imports. Specific goods, including steel, copper, and automobiles, have faced separate levies.

Despite the August drop, the U.S. trade deficit for 2025 remains higher than last year, totaling $713.6 billion through August — a 25% increase from $571.1 billion in the same period of 2024.

Economists note that lower imports can boost economic growth since foreign goods are subtracted from gross domestic product (GDP). “August’s smaller trade deficit will support third-quarter real GDP because more U.S. spending went toward domestic goods and services rather than foreign ones,” said Bill Adams, chief economist at Comerica Bank. He added that while the report is somewhat dated due to the shutdown, it reinforces evidence of robust third-quarter growth.

Trump has defended the tariffs as a way to protect U.S. industries and encourage domestic manufacturing. Importers typically pass the added costs to consumers, which economists say has contributed to inflation remaining above the Federal Reserve’s 2% target.

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Following voter concerns about high living costs, the president recently removed tariffs on products including beef, coffee, tea, fruit juice, cocoa, spices, bananas, oranges, tomatoes, and some fertilizers. Meanwhile, the legality of Trump’s tariffs faces a Supreme Court challenge, with justices questioning whether the president can impose unlimited import taxes by declaring a national emergency.

Source: AP