U.S. trade deficit sinks to 2-year low as businesses try to time orders to beat tariff price hikes

By Jeffry Bartash

Imports fall to 11/2-year low ahead of holiday shopping season

Tariffs have caused big swings in imports of goods like iPhones as U.S. businesses grapple with how to respond.

The numbers: The nation's trade deficit in goods sank 17% in August to a two-year low, extending a run of big ups and downs as businesses try to time imports and exports in order to pay the least amount of tariffs.

The trade gap in goods dropped to $85.5 billion in August from $102.8 billion in the prior month.

Lower deficits add to gross domestic product, the official scorecard for the economy. Before the trade report, GDP was forecast to show a soft increase in the third quarter of between 1% and 1.5%.

Key details: Imports dropped 7% to $261.6 billion in August, according to an advance version of the government's monthly trade report.

Exports slid a smaller 1.3% to $176 billion.

U.S. companies have been trying to time orders to take advantage of temporary tariff reductions, but this is also usually the time of year when they start to bring in more imports to stock up for the holiday shopping season.

Another calculation that goes into GDP revolves around inventories - goods that have been produced but not sold yet.

An advance look at wholesale inventories registered a 0.2% decrease in August, while an advance copy of retail inventories showed no change. Weak inventories subtract from GDP.

Big picture: The ups and down in the trade deficit are likely to persist through at least the end of the year, economists say, as negotiations continue with China and some other large countries.

A huge but temporary increase in the trade deficit resulted in negative GDP in the first quarter, but trade is unlikely to weigh as heavily on third-quarter U.S. growth.

Market reaction: The Dow Jones Industrial Average DJIA and S&P 500 SPX were set to open lower in Thursday trading.

-Jeffry Bartash

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

09-25-25 0931ET