By Andrew Moran

The U.S. trade deficit narrowed sharply in October 2025, falling to its lowest level in 16 years, according to new data from the Bureau of Economic Analysis released on Jan. 8.

The gap in goods and services declined by 39 percent from the previous month to $29.4 billion—the smallest monthly deficit since June 2009.

Economists had penciled in a reading of $58.9 billion.

October’s reading reflected the continuing impact of President Donald Trump’s global tariffs as well as shifting business and consumer behaviors.

The lower-than-expected number was driven by a sharp pullback in imports, falling $11 billion, or 3.2 percent, to a nine-month low of $331.4 billion.

This was fueled by a $2.7 billion drop in purchases of industrial supplies and materials, which partly offset the $6.8 billion increase in capital goods imports.

Exports increased by 2.6 percent, or almost $8 billion, to a record high of $302 billion.

Shipments of American goods were led by a $10.2 billion increase in industrial supplies and materials.

Still, the trade deficit was slightly higher in the first 10 months of 2025, reaching nearly $783 billion. By comparison, the gap was $736 billion in the same year-to-date period in 2024.

October figures also highlighted improvements in U.S. surpluses and deficits.

The deficit with the European Union fell by approximately $9 billion from the prior month to $7.956 billion. The deficit with Ireland declined sharply by $15.1 billion to $3.2 billion.

Trade balances with China and India were little changed from September to October, totaling $14.937 billion and $2.906 billion, respectively.

Surpluses widened with several trading partners, including the United Kingdom ($6.8 billion), Switzerland ($8.833 billion), Singapore ($1.836 billion), and Brazil ($2.581 billion).

Early last year, global trade had been volatile, with many companies front-running Trump’s tariffs. In recent months, however, trade conditions have stabilized, says Stamatis Tsantanis, chairman and CEO of Seanergy Maritime and United Maritime.

“After a long period of uncertainty around tariffs and industrial policy, things finally appear to be stabilizing,” Tsantanis said in a note emailed to The Epoch Times.

“The tension earlier in 2025 created a significant volatility on sentiment in physical freight, futures, and importantly on the equity markets of listed shipping companies.”

With recent momentum in U.S.–China talks and the prospect of greater grain and energy shipments between the world’s two largest economies, the overall outlook has brightened. New trade deals with Japan, South Korea, and the EU further contribute to a steadier, more predictable trade landscape, he added.

President Donald Trump and European Commission President Ursula von der Leyen talk after reaching a trade deal at the Trump Turnberry golf course in Turnberry, Scotland, on July 27, 2025. AP Photo/Jacquelyn Martin

“Simply removing uncertainty is itself a positive driver for shipping,” Tsantanis said.

Monitoring Tariff Policy

The global economy is now in its second year of expansive U.S. tariff policy, but changes could be coming regarding the president’s use of emergency tariff powers.

The U.S. Supreme Court will soon determine when Trump can rely on the International Emergency Economic Powers Act (IEEPA) to impose tariffs without congressional approval. A ruling could come as early as Jan. 9.

Justices signaled skepticism during November’s oral arguments.

For weeks, Trump has repeatedly urged the high court to side with the administration, arguing in November that overturning tariffs would be an “economic disaster.”

“We have taken in, and will soon be receiving, more than 600 Billion Dollars in Tariffs, but the Fake News Media refuses to talk about it because they hate and disrespect our Country, and want to interfere with the upcoming Tariff decision, one of the most important ever, of the United States Supreme Court,” Trump said in a Truth Social post on Jan. 5.

“Because of tariffs, our country is financially, and from a national security standpoint, far stronger and more respected than ever before.”

As of Jan. 5, the federal government has collected more than $98 billion in tariff revenue so far this fiscal year, according to the Treasury Department. In fiscal year 2025, federal tariff income exceeded $215 billion.

The average tariff rate is close to 17 percent, according to The Yale Budget Lab.

U.S. officials have said that should the Supreme Court rule against the White House, they still have several options available to continue implementing the president’s tariff agenda.

“There are lots of other authorities that can be used, but IEEPA is by far the cleanest, and it gives the U.S. and the president the most negotiating authority,” Treasury Secretary Scott Bessent said on CNBC’s “Squawk Box” in November 2025.

“The others are more cumbersome, but they can be effective.”

Predictive markets suggest there is a 24 percent chance that the Supreme Court will rule in favor of Trump’s tariffs.