Trump’s global tariffs curtailed trade, data shows
- The San Juan Daily Star
- 1 day ago
- 4 min read
By ANA SWANSON
President Donald Trump’s sweeping tariffs took a toll on trade in August, as imports of goods and services dropped 5.1%, to $340.4 billion, after taxes on exports from roughly 90 countries went into effect Aug. 7, newly released data from the Commerce Department showed Wednesday.
The data, which incorporates less than a month of Trump’s new tariffs, illustrates how the sharp increase in trade taxes has scrambled life for international business. U.S. firms clamped down on purchases of foreign machinery, industrial supplies, pharmaceutical ingredients and telecom equipment as tariffs went into effect in August, after months of stockpiling that had filled their storerooms and warehouses. Roughly half the drop in imports was because of a decline in purchases of gold, which investors had rushed to buy the previous month as a safe haven for their investments.
U.S. goods exports also fell in August, shrinking $500 million to $179 billion as the rest of the world bought fewer American consumer goods, cars and car parts, and gold. That was offset by an increase in exports of U.S. services, including travel.
Because of the fall in imports, the U.S. trade deficit in goods and services for the month also dropped sharply, decreasing nearly 24%, to $59.6 billion, compared with July.
The data, which is compiled by the U.S. Census Bureau, had been delayed by more than a month because of the government shutdown. It illustrated the volatility that businesses have contended with this year, as Trump introduced what is effectively a new trading system for the United States.
The president announced global double-digit tariffs in April on what he called “Liberation Day,” saying that the previous system had cheated the United States and cost Americans jobs and money. While his tariffs briefly went into effect, they were then largely paused for four months as the administration tried to strike deals with trading partners.
On Aug. 7, the tariffs again went into effect, with a 15% rate on goods from Bolivia, Ecuador and Nigeria; 20% on Taiwanese products; and 50% on Brazilian exports.
Altogether, they brought the U.S. effective tariff rate to more than 18%, the highest level since 1934, according to the Budget Lab at Yale.
U.S. imports and exports had risen in July, as companies that depend on goods from other countries tried to get their shipments in before those tariffs went into effect. In August, trade then dropped, as American businesses imported fewer industrial supplies, food and beverages, and machinery, according to an analysis by Moody’s Analytics.
The sharp drop in the U.S. trade deficit in recent months might appear to have accomplished one of Trump’s goals. Although some economists still disagree with the idea, the president has often looked at the trade deficit as a sign of weakness for the U.S. economy. He has argued that the United States should make more of its own goods.
Stepping back, however, the recent drop in the trade deficit looks so steep largely because the threat of Trump’s tariffs massively increased imports and the trade deficit earlier this year. After Trump’s election, the U.S. trade deficit spiked as companies rushed to try to game the system and bring in goods ahead of tariffs coming into effect. Those shipments started to drop after April, when the president announced his global tariffs.
The same effect played out on a smaller scale in July, as companies brought in more goods ahead of the tariff deadline in August.
John Ryding, chief economic adviser at investment bank Brean Capital, said that imports had been driven month-to-month “by companies anticipating and trying to beat higher tariffs.”
“This has resulted in a pattern of surging imports ahead of a tariff increase followed by a sharp fall in imports once the tariff is imposed,” Ryding said. He added that it would take more stability in the tariff regime to evaluate the ultimate effects on trade but that in August imports were only roughly 5% lower from a year ago.
Tariffs are likely to continue to weigh on imports in the months to come, but Trump still has a long way to go to accomplish his goal of bringing down the trade deficit. Because of the rush of imports earlier in the year, the U.S. goods and services deficit was up a hefty 25% in the year-to-date through August, compared with the same period in 2024.
The stockpiling from businesses before tariffs went into effect has also been a significant factor in mitigating the economic impact of the levies. For months, U.S. companies have been able to hold off on increasing their prices as they worked through older inventory.
But as time went on and that inventory dwindled, more companies have begun to pass the burden of tariffs on to American consumers in the form of higher prices. That has weighed on Trump’s popularity and presented a conundrum for a president who campaigned on his ability to keep costs low for average American families.
This month, Democrats won elections around the country in large part by harnessing worries about the cost of living. Last week, the Trump administration introduced new tariff exemptions in an effort to lower some food prices. It remains to be seen if concerns about high consumer costs will encourage the administration to further back down on its tariffs.
Many of the president’s tariffs, including those he issued in early August, could also be undermined by a challenge at the Supreme Court. The court is weighing whether Trump exceeded his legal authority with those tariffs, and it could curtail or strike them down in the coming weeks or months.
Even so, the president has other legal authorities he can use and is likely to announce new measures to replace at least some of them.