US trade deficit widens sharply in December; goods trade gap highest on record in 2025

[Ol Janx Spirit]

3. These reports have been stubbornly better than I thought they would be going in...

...to this tariff regime.

Exports fell 1.7% to $287.3 billion in December. Goods exports dropped 2.9% to $180.8 billion, weighed down by an $8.7 billion decline in industrial supplies and materials, mostly non-monetary gold. Exports of other goods fell.

But capital goods exports increased, boosted by semiconductors. There were increases in exports of consumer goods, including pharmaceutical preparations. Exports of goods increased 5.7% to an all-time high of $2.20 trillion in 2025, boosted by capital goods, industrial supplies and materials, other goods as well as consumer goods.

...

The economy likely grew at a 3.0% annualized rate last quarter after expanding at a 4.4% pace in the July-September quarter, a Reuters survey of economists showed.

https://www.reuters.com/business/us-trade-deficit-widens-sharply-december-goods-trade-gap-highest-record-2025-2026-02-19/

This is part of the reason that Blondie Bondi can shrilly scream about the DOW being high, and a reason that the Administration uses as an indication that the economy is actually doing well.

Trade deficits act as a direct subtraction in the GDP formula, so the fact that the GDP number is still pretty robust even with these trade deficits indicates that the economy is still doing pretty well--which is surprising given the massive tax increase in the form of tariffs and the extreme reduction of the labor force through both immigration policy and the slashing of government jobs (assuming we can believe the numbers we are getting.) Of course, well for whom is part of the rub...but still....

Thus far, the single horsehair holding the Sword of Damocles over our economy has managed to not break.

How long will or can that continue?