US Trade Deficit Collapses to Lowest Level Since 2009

Source: Coindoo Original Title: US Trade Deficit Collapses to Lowest Level Since 2009 Original Link:

The United States is seeing one of the fastest improvements in its trade balance in more than a decade, driven by a rare combination of falling imports and surging exports.

New data for October show the overall goods and services trade gap narrowing sharply, reinforcing signs that external imbalances are easing at a historically rapid pace.

Key Takeaways

• The US trade deficit is shrinking at its fastest pace in years, reaching the smallest level since 2009.
• Imports are falling while exports have climbed to record highs.
• Trade conditions remain uncertain heading into 2026 despite the improving balance.

In October, the US trade deficit shrank by nearly $19 billion compared with the previous month, bringing the total gap down to about $29.4 billion. That marks the smallest deficit recorded since 2009 and highlights how quickly trade dynamics have shifted in recent months. Since peaking in March, the deficit has now contracted by more than $100 billion, an unusually steep adjustment over such a short period.

Imports Drive the Shift in the Trade Balance

A major driver of the improvement has been a sustained pullback in imports. In October alone, inbound shipments fell more than 3% month over month, pushing total imports to their lowest level since early 2024. That trend appears consistent with broader logistics data pointing to a cooling import environment rather than a one-off decline.

According to Descartes Systems Group, total US import volumes for 2025 ended slightly below last year’s levels, despite pockets of strength earlier in the year. Imports from China continued to weaken into December, falling again on a monthly basis and posting a steep annual decline. China’s share of total US container imports dropped to just over 31% in December, the lowest December reading in the past six years, underscoring a structural shift in sourcing rather than a temporary slowdown.

Exports Hit Records as Trade Uncertainty Builds

Exports, meanwhile, are moving in the opposite direction. US outbound shipments rose nearly 3% in October, lifting total exports to a record high. Strong external demand has helped offset weaker import flows, accelerating the narrowing of the trade gap and providing a rare boost from net trade.

The improvement is also evident in inflation-adjusted terms. The real merchandise trade deficit narrowed to around $63 billion in October, the smallest level since early 2020, suggesting the adjustment reflects real volume changes rather than price effects alone.

Looking ahead, logistics indicators point to a more cautious global trade backdrop entering 2026. Rising uncertainty tied to US-China trade measures, pending tariff rulings, and renewed security risks in the Red Sea suggest that while the US trade deficit is shrinking rapidly, global supply chains remain under pressure, and trade flows could stay volatile in the months ahead.