(Bloomberg) — The US trade deficit increased in December, finishing off a tumultuous year marked by inconsistent tariff policies.
According to data from the Commerce Department released Thursday, the goods and services trade gap grew to $70.3 billion last month. This brought the total annual deficit to $901.5 billion, one of the largest since records began in 1960.
“Despite all the tariff news and fluctuations in the data, the trade deficit hardly changed in 2025,” said Oren Klachkin, an economist at Nationwide Financial Market, in a report. “With the worst effects of tariffs likely behind us, we expect trade to find a more stable pattern.”
The trade figures were quite variable throughout 2025 as US importers adjusted to numerous tariff announcements from President Donald Trump. Imports of gold and pharmaceuticals were particularly erratic, as businesses rushed to avoid increased duties.
The December deficit, which was larger than all but one forecast in a Bloomberg survey of economists, was mainly due to a 3.6% rise in imports, including increases in computer accessories and motor vehicles. In contrast, exports of goods and services fell by 1.7%, mainly because there were fewer shipments of gold.
After the report, several economists predicted that trade would have a smaller positive impact, or might even hinder fourth-quarter gross domestic product (GDP), which will be released on Friday. The latest GDPNow estimate from the Federal Reserve Bank of Atlanta reflects this, predicting that net exports will barely contribute to fourth-quarter growth, now expected to be around 3%.
When adjusted for price changes that factor into real GDP calculations, the merchandise trade deficit increased to $97.1 billion in December, the highest since July. Trade in gold, unless it’s for industrial uses like jewelry production, is not included in the government’s GDP calculations.
Trump has used tariffs as a part of his plan to lessen dependence on foreign goods, promote domestic investments, and reverse decades of decline in manufacturing jobs. He and his economic team have criticized studies showing that American consumers have been burdened by the costs of these tariffs.
A significant uncertainty for trade is whether the Supreme Court will uphold Trump's ability to implement broad tariffs through an emergency law. A decision could be announced as early as Friday, although the court typically does not disclose in advance which opinions will be released.
Last year, US companies imported nearly $145 billion more in computers and accessories than in 2024, driven by the surge in investment in artificial intelligence.
In terms of trade balance, the deficit with China significantly decreased, reaching about $202 billion, the smallest gap in over 20 years, thanks to the higher tariffs imposed by Trump on Chinese imports. Trade has largely been redirected to other countries like Mexico and Vietnam, where deficits reached record levels.
Meanwhile, the gap with Taiwan grew to a record $146.8 billion last year, while the annual shortfall with Canada decreased.
Separate data released Thursday indicated that US initial jobless claims fell last week, marking the largest drop since November.