• The US trade deficit narrowed to $105.0 billion in September, below the $108.0 billion consensus and August’s revised $105.7 billion.
  • Exports rose 1.9% to $321.51 billion, outpacing a 1.2% increase in imports to $426.56 billion.
  • The goods deficit with China widened to $21.87 billion from $18.40 billion, even as the overall imbalance improved.

A Modest Improvement

The US trade deficit narrowed to $105.0 billion in September, according to newly reported figures, beating the consensus forecast of $108.0 billion and slightly below August’s revised $105.7 billion. The improvement was driven by faster export growth than import growth: exports climbed 1.9% to $321.51 billion, while imports rose 1.2% to $426.56 billion.

The goods deficit stood at $135.91 billion, partially offset by a $30.87 billion services surplus. The services surplus covered roughly 23% of the merchandise gap, underscoring the persistent imbalance in goods trade.

China Deficit Widens

Despite the overall narrowing, the bilateral goods deficit with China increased to $21.87 billion, up from $18.40 billion in August—a rise of about 18.9%. The widening China gap complicates the narrative of steady improvement and suggests that shifts in sourcing and shipment timing may be at play.

The figures come amid heightened scrutiny of US trade policy, with tariffs remaining a central tool in efforts to reduce reliance on imported goods. Economists have cautioned that bilateral deficits can shift without meaningfully altering the overall balance.

Investment Boom Drives Imports

Underneath the headline, the data reflects a surge in capital-goods imports tied to the artificial intelligence investment boom. September goods imports rose 2.4% in advance data, with capital-goods imports jumping 7.5% month over month and 77.2% year over year—a record high—as demand for foreign-made equipment supporting AI infrastructure surged.

“The import surge is evidence of continued business investment and consumer-spending momentum, rather than simply economic weakness,” said Daniel Vielhaber, a nationwide economist, according to people familiar with the matter.

Still, net trade may weigh on third-quarter GDP growth. Oxford Economics estimated a trade drag of 3.25 percentage points, while Pantheon Macroeconomics pegged it at about four percentage points—estimates made before the full September report.

Political and Global Context

Tariffs remain at the center of the debate over whether the US can reduce its reliance on imports. Research by the German Economic Institute (IW) found mixed results: robust growth and investment, but no reduction in the trade deficit attributable to the administration’s broader economic agenda.

The same research highlighted a change in trading partners rather than a simple disappearance of the imbalance: China’s share of the goods deficit fell to 14% from 29% in August 2024, while the European Union’s share fell to 7% from 20%. Census data showed record August imports from Mexico and Vietnam, suggesting that bilateral shifts should not be mistaken for an equivalent improvement in the overall trade balance.

What’s Next

The key questions are whether the improvement persists and whether export gains become sustained and broad-based. Continued AI infrastructure spending could keep equipment imports elevated even as some consumer or tariff-sensitive imports weaken.

A separate advance report on October 28 estimated September’s goods-only deficit at $134.9 billion, up from $132.1 billion in August. That earlier release and the headline figures concern different scopes and potentially revised data; a widening goods-only advance estimate does not, by itself, disprove a narrowing in the later combined goods-and-services balance.

Correction: An earlier version of this article misstated the percentage change in the China trade deficit. It widened by approximately 18.9%, not 3.47%.