Trump’s tariffs had little impact on U.S. trade deficit in 2025
San José, CA – The December report on the U.S. trade deficit of goods and services, or how much more the U.S. imported as compared to exports, jumped to $70 billion. For 2025 as a whole, the U.S. trade deficit totaled a little more than $900 billion, almost the same as in 2024. This means that Trump’s on and off again tariffs failed to close the gap between imports and exports – which Trump claimed would bring more production home. This fact matched the deterioration in the number of manufacturing jobs, which shrank every month in 2025, for a total loss of more than 100,000 jobs last year.
While Trump claimed that foreign companies would pay for the tariffs by being forced to cut their prices, this did not happen. This can be easily seen in the index of import prices, which was exactly the same in December of 2025 as it was a year earlier in December 2024.
Economic study after economic study said that 90% or more of the cost of the tariffs were being paid by U.S. businesses or consumers. The Trump administration finally had enough of hearing the truth, so their chief economist, Kevin Hassett, said that the authors one study (who were on the economic research staff of the New York Federal Reserve Bank) should be “disciplined.”
There are two reasons why Trumps tariffs were not able to bring back more manufacturing jobs.
If Trump’s goal was to bring back manufacturing to the United States, he needed to bring down the prices of goods and labor that manufacturing needs. Instead, he put tariffs on raw materials and intermediate goods (manufactured goods that are used to make finished products) like steel and aluminum.
Also, while Trump likes to harken back to the industrialization during the McKinley administration (1897-1901) when tariffs were high, he omits the fact that the factories of that time were filled with immigrant labor. Thus, Trump’s attempt at mass deportation and terrorizing immigrants are driving away the very workers needed to re-industrialize.