The US trade deficit narrowed more sharply than expected

Official data released on March 12th shows that the US trade deficit in January 2026 narrowed more sharply than expected, thanks to a boost from exports.

However, experts warn that risks from President Donald Trump's tariff policies and conflicts in the Middle East are darkening the outlook for trade.

According to the U.S. Department of Commerce, the country's trade deficit in January 2026 was $54.5 billion, a decrease of 25.3% compared to December 2025. This figure is significantly lower than the $67 billion deficit forecast by economists in a survey by Dow Jones Newswires and The Wall Street Journal.

The trade flows of the world's largest economy have been continuously affected by rapid tariff changes since President Trump returned to the White House in 2025. Another major concern is the impact of the conflict in the Middle East, which erupted following the US and Israeli attacks on Iran on February 28.

Economist Oren Klachkin from Nationwide commented: “We won’t see the full impact of the conflict on U.S. imports and exports until we have data from March or April 2026.” He called the current situation “very unpredictable” and predicted that U.S. exports would be hit harder than imports, while the uncertainty from the war would also dampen business investment, posing a risk to import growth.

Although January data reflected an outdated tariff system following the US Supreme Court ruling in February 2026, uncertainty still hung over the market. Immediately after the court ruling, President Trump used other powers to impose new temporary tariffs of 10% on imports. On March 11, the US government also announced new investigations into dozens of trading partners in an effort to revive its protectionist economic agenda.

Meagan Schoenberger, senior economist at KPMG, believes the sudden narrowing of the trade deficit in January is likely temporary. The main reasons are gold trading activity and significant volatility in the pharmaceutical industry. She predicts imports will soon rebound as businesses ramp up stockpiling before high tariffs are fully reinstated through other legal regulations.

Source: VTV