US trade deficit narrows in January as exports jump to record high

The U.S. trade deficit narrowed sharply in January as exports surged to a record high and imports fell, a trend that if sustained, could see trade contributing to economic growth in the first quarter.

The trade gap contracted 25.3% to $54.5 billion, the Commerce Department's Bureau of Economic Analysis and Census Bureau said on Thursday. Data for December was revised to show the deficit widening to $72.9 billion instead of $70.3 billion as previously estimated. Economists polled by Reuters forecast the trade deficit shrinking to $66.6 billion in January.

The report was delayed because of last year's government shutdown. Trade data have been volatile amid President Donald Trump's sweeping tariffs. The import duties, which Trump pursued under a law meant for use in national emergencies, were struck down by the U.S. Supreme Court.

But Trump responded to the ruling by imposing a 10% global tariff, which he said would rise to 15%. The Trump administration said on Wednesday it was launching two trade investigations into excess industrial capacity in 16 major trading partners and into forced labor.

Trump has defended the tariffs as necessary to address trade imbalances and protect U.S. industries. So far, the manufacturing rebirth has not materialized and 100,000 factory jobs have been lost since January 2025.

Exports jumped 5.5% to an all-time high of $302.1 billion in January. The increase was the largest since October 2021. Goods exports soared 8.1% to $195.5 billion. They were boosted by a $9.4 billion increase in exports of industrial supplies and materials, mostly nonmonetary gold and other precious metals.

Capital goods exports increased $5.4 billion to a record high, boosted by computers, civilian aircraft as well as computer accessories. Exports of other goods rose $2.9 billion, also to an all-time high. But consumer goods exports decreased $2.8 billion to the lowest level since October 2022, pulled down by a $2.1 billion decline in pharmaceutical preparations.

Imports fell 0.7% to $356.6 billion in January. Goods imports slipped 1.0% to $277.3 billion. They were dragged down by a $3.3 billion decrease in consumer goods, mostly pharmaceutical preparations. Imports of automotive vehicles, parts and engines fell $2.8 billion amid decreases in trucks, buses and special-purpose vehicles, as well as passenger cars.

Imports of industrial supplies and materials dropped $1.4 billion, with nonmonetary gold falling $1.1 billion.

But imports of capital goods increased $3.4 billion to a record high, driven by computers and telecommunications equipment, likely linked to artificial intelligence and the construction of data centers.

The goods trade deficit narrowed 17.6% to $81.8 billion in January. Exports of services increased $1.2 billion to a record high $106.7 billion, reflecting rises in other business services, financial services and charges for the use of intellectual property. Exports of travel services fell $0.3 billion, likely reflecting a reduction in tourism.

Imports of services increased $0.2 billion to an all-time high of $79.3 billion amid gains in other business services and insurance services.

Trade made a negligible contribution to the economy's 1.4% annualized growth pace in the October-December quarter.