The U.S. trade deficit shrank by nearly half between March and December, falling from $136.0 billion to $70.3 billion, according to Commerce Department data released Thursday. That is a $65.7 billion improvement in nine months.
The numbers tell a straightforward story. President Trump announced sweeping tariffs on Liberation Day in March. The deficit peaked that same month as importers rushed to bring in goods ahead of the new rates. Then it fell, steadily and significantly, as the tariffs took hold and redirected trade flows.
The goods deficit alone dropped 39 percent, from $162.1 billion in March to $99.3 billion in December. The combined deficit actually hit its lowest point in October, at $58.5 billion, before ticking up slightly in December.
The most consequential figure in the data may be the China-specific deficit, according to Breitbart. It fell from $295.5 billion in 2024 to $202.1 billion in 2025, the smallest in more than two decades.
That matters because reducing dependence on Chinese imports has been the strategic centerpiece, not just the economic centerpiece, of the tariff agenda. For years, the bipartisan consensus held that engagement with Beijing would liberalize its economy and level the playing field. It didn't. What it did was hollow out American manufacturing, transfer critical supply chains overseas, and hand Beijing the leverage it wielded without hesitation.
A $93 billion reduction in the China deficit in a single year is not a rounding error. It reflects actual changes in where American businesses source goods and how trade flows respond when the rules change.
Critics will inevitably point to the March peak as evidence that the tariffs themselves caused the spike. They are half right, and it proves the opposite of what they think.
The March surge was driven by what economists call "front-loading," importers racing to get goods into the country before tariff rates went into effect. That behavior inflated the March number artificially. It also means the true baseline was already lower than $136 billion. Which makes the subsequent decline even more significant when measured against normal trade volumes.
The December figure of $70.3 billion was slightly above the October low, a gap attributed to volatile gold flows and a surge in computer accessory imports tied to artificial intelligence infrastructure investment. Strip out those temporary factors and the underlying trajectory points in one direction: down.
Trade deficits are not inherently catastrophic, and not every conservative agrees on what they signify. But persistent, structural deficits of the kind the United States has run for decades represent something specific: American consumption subsidizing foreign production. When the gap narrows because imports fall and domestic sourcing rises, that is economic activity being relocated back inside U.S. borders.
The Washington establishment spent years insisting this kind of reshoring was impossible without triggering economic collapse. The data released Thursday suggests otherwise. Nine months of sustained improvement is not a blip. It is a trend.
The policy class that told Americans free trade with China would lift all boats, that tariffs were economic suicide, that manufacturing jobs were gone forever, now has to contend with numbers that contradict every one of those assumptions. They will find ways to explain the data away. They always do.
The question now is whether these numbers hold as the tariff regime matures and trading partners adjust. Supply chains do not reorganize overnight, and some of the shift in import patterns may reflect rerouting through third countries rather than genuine reshoring. That is a challenge for enforcement, not an argument against the policy.
What the data establishes is a proof of concept. Tariffs, applied with strategic intent and sustained political will, can move the needle on trade imbalances that Washington accepted as permanent for a generation. The March-to-December trajectory does not prove the job is finished. It proves the job is possible.
For two decades, the China deficit climbed while politicians from both parties promised to do something about it. One administration actually did.
