Trade deficit plunges to 16-year low due to U.S. gold rush and shrinking imports

By Jeffry Bartash

Still, the trade deficit is growing, not shrinking

U.S. imports sank in October to help drive down the trade deficit to a 16-year low.

The numbers: The U.S. trade deficit plummeted 39% in October to reach the lowest level in 16 years, but the steep drop stemmed from an ongoing gold rush of sorts as well as efforts by businesses to work around high tariffs.

The trade gap shrank to $29.4 billion in October from $48.1 billion in September, the government said Thursday. The October report was delayed by the federal shutdown.

A combination of surging U.S. exports and dwindling imports explained the big drop in the deficit. The last time the trade gap was so low was in 2009.

Key details: Exports rose 2.6% in October. While the U.S. shipped more industrial supplies overseas, a big increase in gold exports also played a large role.

Investors brought lots of gold (GC00) in from outside the U.S. earlier in the year on worries the precious metal might get slapped with tariffs. But when Trump administration backed off, those worries evaporated, prompting dealers to send the gold back to their prior storage sites in other countries such as Switzerland.

Imports, meanwhile, fell by 3.2% in October to the lowest level in nearly two years. The biggest decline by far was in pharmaceutical drugs.

U.S. companies had boosted imports earlier in 2025 to avoid tariffs, then pulled back after they took effect.

Still, big monthly increases and decreases in the trade deficit in 2025 have done nothing to reverse a long-term of high and rising U.S. trade deficits.

In the first 10 months of 2025, the trade deficit totaled $782.8 billion, up 8% from $726.8 billion in the first 10 months of 2024.

If normal trends reassert themselves in November and December, the U.S. could still end up running the second- or third-largest trade deficit ever in 2025.

The biggest effect of the tariffs has been a declining trade relationship with China. Imports from the Asian giant contracted to $266 billion in the first 10 months of 2025 from $363 billion in the same span in the prior year.

To make up for the loss of Chinese goods, the U.S. has imported more products from Vietnam, Taiwan, Mexico, Thailand and European countries.

Big picture: The big drop in the trade deficit in October could pave the way for a strong increase in gross domestic product in the fourth quarter if it's sustained. Lower deficits add to GDP.

The decline in imports could be a sign of weaker consumer demand. Less consumer spending would be a negative for GDP.

Looking ahead: "I am not paying much attention to the gyrations and waiting for the numbers to settle out, but it feels like the underlying trade figures are not all that different from before the tariff hikes, at least for now," said chief U.S. economist Stephen Stanley of Santander Capital Markets.

Market reaction: The Dow Jones Industrial Average DJIA and S&P 500 SPX fell in Thursday trading.

-Jeffry Bartash

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01-08-26 1009ET