Thanks to President Donald Trump’s leadership and the political risk he took in levying tariffs against U.S. trade partners to reindustrialize America, secure supply chains for domestic energy production and manufacturing and make new trade deals, the U.S. trade in goods deficit has shrunk by $181.7 billion to $534.8 billion the first six months of 2026, according to the latest data compiled by the U.S. Census Bureau.
The news comes as U.S. goods exports have increased $166.6 billion to $1.2 trillion the first half of 2026 — an all-time record — while imports decreased by $15 billion to $1.78 trillion.
It might not seem like much, but when compared to the size of the U.S. economy — on pace to reach a $32.7 trillion Gross Domestic Product (GDP) thereabouts, if the trade deficit holds at $1.069 trillion for the year, it would only represent 3.27 percent of the economy.
That would be the smallest the trade deficit has been as a share of the economy since 1998, when it was just 2.5 percent. By 1999, it was already 3.4 percent. It peaked in 2006 at 5.9 percent. After the 2007 to 2009 recession, the trade deficit stabilized out at about 4 percent of GDP since 2013, give or take a few tenths of a percent.
For the Trump trade agenda, then, getting that down to potentially 3.27 percent in 2026 would be an amazing accomplishment — unprecedented in the post-NAFTA-WTO era — and it is coming on the heels of boosting U.S. exports. Usually when the trade deficit sinks, it’s because imports decreased faster than exports during a slowdown or recession. Whereas 2026 is looking like an export boom.
Two of the biggest winners so far are capital goods including aircraft, industrial machinery, computers and semiconductors and energy, with boosted oil and natural gas exports during the Iran War. There was also an influx of non-monetary gold in 2025 that is now on its way back out of the U.S. in 2026.
One of the largest changes impacting the trade deficit — and why it was so deep in the 2000s — is the U.S. is now a net exporter of energy. As a result, one of the impacts of the higher energy prices during the war has been to reduce the recorded trade in goods deficit, the opposite situation as in the 2000s.
And the biggest losers were imported consumer goods, industrial supplies and automobiles, largely due to stockpiling in 2025 in anticipation of the April 2025 Liberation Day.
The good news is that the U.S. is financing less of its consumption as we sell more of what we make. The nearly $167 billion boost in exports the first half of 2026 with imports down a hair, the arithmetic (minus the non-monetary gold) is adding to nominal GDP since imports are subtracted from GDP.
Yes, the higher energy prices then get sucked out of the inflation-adjusted, real GDP, but the extra oil, gas, aircraft, machinery and semiconductor exports are still a real boost for the economy.
And if the current numbers hold, the smallest trade deficit as a share of the economy since 1998 is just the kind of story President Trump and Vice President J.D. Vance will like telling in 2026 — and again in 2028, particularly in the Rust Belt states of Pennsylvania, Michigan, Wisconsin and Ohio that won Trump the election in 2016 and 2024. As usual, stay tuned.
Robert Romano is the Executive Director of Americans for Limited Government Foundation.
