Published December 11, 2025
The US trade deficit shrank sharply in September 2025 to its smallest level in more than five years, helped by a sudden boom in gold exports and softer import growth. At first glance, the numbers look like a decisive win for Washington’s aggressive tariff strategy. Dig a little deeper, though, and the picture is much more complicated.
According to fresh data released today by the US Census Bureau and the Bureau of Economic Analysis (BEA), the overall goods and services deficit fell to $52.8 billion in September, down from a revised $59.3 billion in August – a drop of about 10.9%. [1]
Exports jumped 3.0% to $289.3 billion, while imports rose a modest 0.6% to $342.1 billion. [2] That narrowing pushed the gap to its lowest level since the middle of 2020 and surprised economists, who had expected the deficit to widen toward $63 billion. [3]
A closer look shows that a surge in non‑monetary gold – essentially bullion moving through global financial centers – did much of the heavy lifting. That has big implications for how much this “good news” really matters for growth, inflation and policy.
What the September trade report actually shows
The new September figures mark the second month in a row that the US trade balance has improved and the smallest monthly deficit since the early months of the pandemic. [4]
Key headline numbers:
- Goods and services deficit: $52.8 billion (down $6.4 billion from August) [5]
- Exports: $289.3 billion (up $8.4 billion)
- Imports: $342.1 billion (up $1.9 billion) [6]
- Goods trade deficit: $79.0 billion, the smallest since September 2020 [7]
- Services surplus: $26.2 billion, slightly smaller than in August [8]
Year to date, however, the story is much less flattering: the cumulative goods and services deficit is still up $112.6 billion, or 17.2%, compared with the same period in 2024, because imports have grown faster than exports over the year as a whole. [9]
So, while September is a clear one‑month improvement, the US remains a very large net importer overall.
The ‘gold rush’ that shrank the deficit
The single most striking detail in the report is what happened to non‑monetary gold.
Government data show that:
- Exports of goods rose $8.8 billion in September.
- Of that increase, $6.1 billion came from non‑monetary gold.
- On the import side, non‑monetary gold rose $1.9 billion, accounting for essentially all of the $1.7 billion increase in goods imports. [10]
In other words, gold alone explains most of the improvement in the nominal trade deficit.
Economists at KPMG estimate that once you strip out gold and adjust for prices – the way BEA does when calculating real net exports for GDP – the deficit only narrowed by about 3.2%, not the headline 10.9%. [11]
Why does gold matter so much?
- Non‑monetary gold trade often reflects financial flows and safe‑haven demand, not factories churning out more goods.
- BEA explicitly notes that it replaces exports and imports of non‑monetary gold with an internal adjustment based on domestic production and industrial use when constructing GDP, precisely because bullion movements don’t represent real output in the usual sense. [12]
September’s data also show a dramatic shift in the US trade balance with Switzerland, a major global hub for gold refining and storage. The US moved from a small deficit with Switzerland in August to a $6.6 billion surplus in September after exports to the country jumped by $7.1 billion, again largely driven by bullion flows. [13]
Analysts link that to safe‑haven buying amid geopolitical tensions, particularly ongoing conflict in Ukraine and the Middle East, which tend to push investors toward gold and Swiss vaults rather than US manufactured goods. [14]
Consumer goods, pharma and capital goods: the real economy underneath
Beyond gold, several important shifts show up in the September report:
- Consumer goods imports climbed by $10.2 billion, led by a $12.9 billion jump in pharmaceutical preparations. [15]
- Capital goods imports fell by $5.6 billion, including a $4.7 billion decline in computers and lower imports of electrical equipment. [16]
- Automotive imports were at their lowest level since late 2022, suggesting softening demand or delayed purchases amid high vehicle prices and tariff uncertainty. [17]
Those patterns are consistent with a US economy where:
- Households are still spending on medicines and everyday consumer goods.
- Businesses are turning more cautious on big-ticket investments like machinery and IT hardware.
- The auto sector is feeling the twin pressures of higher prices and higher borrowing costs.
KPMG’s breakdown highlights that outside gold, imports are being reshaped by 2025’s tariff changes, including new or revised duties on pharmaceuticals and proposed excise tariffs on offshored service work. [18]
Tariffs and shifting supply chains
The September numbers arrive against the backdrop of President Donald Trump’s expanded tariff program, which has targeted a wide array of trading partners and product categories.
A separate Reuters analysis today notes that US imports of telephones and parts from Vietnam, a key smartphone hub for Samsung, dropped to their lowest monthly level since 2020 in November, after a 20% tariff was imposed on Vietnamese goods in August even though smartphones themselves are technically exempt. [19]
Earlier in the year, phone exports from Vietnam had rebounded when the US temporarily exempted certain electronics from steep tariffs, but shipments have slumped again as companies confront renewed trade uncertainty and weaker global demand. [20]
That pattern fits with a broader theme running through today’s commentary:
- Trade volumes are increasingly being driven by tariff timing, stockpiling and supply‑chain rerouting, not just organic end‑user demand. [21]
- Countries like Mexico, Vietnam and India have benefited from trade diversion away from China, but now face their own rising tariff risk as Washington widens its targets. [22]
Country-by-country: gold, pharma and China reshape the map
The official breakdown for September shows big swings across trading partners: [23]
- Surpluses with:
- Switzerland: $6.6 billion (from a small deficit in August, driven by gold)
- Netherlands: $5.9 billion
- South and Central America: $5.0 billion
- Hong Kong, Brazil, the UK, Australia and Saudi Arabia also recorded smaller surpluses.
- Deficits with:
- Ireland: $18.2 billion, up sharply due to pharmaceutical imports tied to multinational tax and production structures.
- Mexico: $17.8 billion
- European Union: $17.8 billion
- Vietnam: $14.4 billion
- China: $11.4 billion, a gap that narrowed by $4.0 billion as US imports from China fell almost $3.9 billion.
KPMG and several independent analysts argue that these shifts underscore how tariffs and tax regimes are distorting bilateral balances:
- Tariffs and trade tensions appear to be suppressing direct imports from China while pushing more production into Mexico and Southeast Asia. [24]
- The ballooning deficit with Ireland reflects the concentration of pharmaceutical production and intellectual property in low‑tax jurisdictions, rather than a sudden surge of Irish consumption of US goods. [25]
What does this mean for US growth and the Fed?
Even with the gold caveat, the September report still looks directionally positive for GDP.
Before the trade release, the Atlanta Federal Reserve’s GDPNow model was estimating third‑quarter real growth at around 3½ percent, and some private forecasts edged higher toward 3.6% once the new trade data were incorporated. [26]
That marks a sharp reversal from earlier in 2025, when volatile trade flows subtracted an estimated 4.68 percentage points from GDP in the first quarter before adding much of that back in the second quarter. [27]
However, the impact on the official GDP figures is:
- Delayed – the first estimate of Q3 GDP is now scheduled for December 23, after a 43‑day government shutdown forced agencies to push back major data releases. [28]
- Smaller than the headline suggests, because BEA strips out non‑monetary gold when calculating real net exports. [29]
For the Federal Reserve, which cut interest rates to a three‑year low at its latest meeting, analysts say the report supports the narrative of a “soft landing” – steady growth with easing inflation – but is unlikely to materially change the central bank’s rate path, since much of the improvement is tied to safe‑haven demand for gold rather than a broad export boom. [30]
White House victory lap vs. economists’ caution
The political response has been swift.
A new article on the White House website, headlined “Trump Tariffs Work: Trade Deficit Plummets to Five-Year Low,” hails the September numbers as proof that the administration’s “America First” trade agenda is delivering. It highlights a reported more‑than‑35% decline in the deficit versus last year, along with record or near‑record levels of exports and a sharply narrower gap with China. [31]
The Financial Times similarly notes that Treasury Secretary Scott Bessent has pointed to the trade data as evidence the economy can still hit roughly 3% growth in 2025, despite the drag from this year’s prolonged government shutdown. [32]
But outside the administration, economists are much more circumspect:
- CTOL Digital describes the report as a “mirage”, arguing that the improvement is dominated by gold flows and tariff‑distorted pharma trade, while the underlying deficit remains historically wide and year‑to‑date figures are still up double digits from 2024. [33]
- KPMG stresses that non‑monetary gold accounts for nearly 70% of the export gain and all of the import increase, so the boost to real GDP from trade is “helpful but not transformative.” [34]
- The American Journal of Transportation, summarizing the BEA release, highlights that the three‑month moving average deficit has improved, but also that imports continue to grow faster than exports over 2025 as a whole. [35]
In plain language: the deficit is smaller than it was a few months ago, but not for reasons that necessarily indicate a permanently stronger US trade position.
Investor and business takeaways
For markets and companies, today’s data and commentary point to a few practical themes:
- Don’t trade the headline alone
The narrowing of the trade gap looks impressive at –10.9%, but the GDP‑relevant improvement is closer to –3% once gold is removed. [36] - Tariffs are still reshaping global supply chains
From Mexico and Ireland to Vietnam and Switzerland, businesses are re‑routing production, stockpiling ahead of tariff hikes or seeking exemptions – all of which can create month‑to‑month noise in trade data that has little to do with end‑user demand. [37] - Capital spending looks wobbly
Falling imports of capital goods, especially computers and equipment, may hint at weaker investment as firms weigh higher borrowing costs, tariff uncertainty and slower global growth. [38] - Watch gold and pharma for reversals
If safe‑haven demand for gold eases or if pharma trade normalizes after recent tariff and pricing changes, part of September’s apparent progress on the deficit could simply unwind in Q4. [39] - The next big milestone is December 23
The delayed Q3 GDP release will show exactly how much trade – minus gold noise – contributed to growth, and how that interacts with the Fed’s recent rate cut and ongoing debates about financial regulation under Treasury Secretary Bessent. [40]
The bottom line
September’s trade report does show genuine, if modest, progress toward a smaller US trade deficit. Exports of many real‑economy goods – from consumer products to some industrial supplies – are up, and imports of capital goods and autos are softening.
But the dramatic headline improvement is heavily flattered by a one‑off surge in gold flows and tariff‑driven distortions in sectors like pharmaceuticals. Strip those out, and the US is still running a large deficit that is, on a year‑to‑date basis, bigger than last year’s, even as tariffs, shutdowns and policy changes inject new volatility into trade and growth.
For policymakers, investors and businesses, the message is clear: this is a welcome data point, not a decisive turning point. The real test will come in the months ahead, when we see whether trade keeps improving once the gold rush fades and tariff effects settle into a new normal.
References
1. www.bea.gov, 2. www.ajot.com, 3. www.reuters.com, 4. www.reuters.com, 5. www.bea.gov, 6. www.ajot.com, 7. www.reuters.com, 8. www.ajot.com, 9. www.ajot.com, 10. www.ajot.com, 11. kpmg.com, 12. www.bea.gov, 13. www.ajot.com, 14. www.ctol.digital, 15. www.ajot.com, 16. www.bea.gov, 17. www.reuters.com, 18. kpmg.com, 19. www.reuters.com, 20. www.reuters.com, 21. kpmg.com, 22. www.ctol.digital, 23. www.ajot.com, 24. kpmg.com, 25. www.ajot.com, 26. www.reuters.com, 27. www.reuters.com, 28. www.reuters.com, 29. www.bea.gov, 30. www.ctol.digital, 31. www.whitehouse.gov, 32. www.ft.com, 33. www.ctol.digital, 34. kpmg.com, 35. www.ajot.com, 36. kpmg.com, 37. www.ajot.com, 38. www.bea.gov, 39. www.ctol.digital, 40. www.reuters.com
