Donald Trump
Do Donald Trump’s Tariffs Hold the Key to Addressing the U.S. Trade Deficit? Here’s What We Know
Soon after taking office for his second presidential term in January 2025, Donald Trump imposed tariffs on imports – a widely contested decision both at home and abroad, that made global headlines for weeks.
However, a reported major dip in the U.S. trade deficit in the months following that announcement has excited many, including CNBC anchor Rick Santelli.
In January, when Santelli read the Commerce Department’s update about the U.S. trade deficit on air, his reactions made it evident that he was not expecting the results.
“On the trade balance, which we know is going to be a deficit, we’re expecting a number around $58 billion,” he said, according to a blog post on Moneywise.
An X user reacts to CNBC anchor Rick Santelli's update on the U.S. trade deficit.
His tone soon changed. “Buckle up; this is unreal! The movement in this number: -$29.4 billion — we cut it basically in half! We cut it in half!” Santelli said, noting the drop in October 2025. It marked a 38 percent drop from September’s $48.1 billion gap.
In January 2026, the trade deficit was back at $54.5 billion, following a revised $72.9 billion in December, according to Trading Economics.
Santelli pointed out the dramatic swing in the trade deficits compared to the previous years. “Just consider this: In March, it was $136 billion. Right now, it’s a whisker under $30 billion. We haven’t been that small in a long time — I don’t have enough records here to go back that far!” he said, according to Moneywise.
According to the media portal, which cited CNBC, it was the smallest deficit since June 2009.
But, the question remains: is the drop in the U.S. trade deficit a direct result of Trump’s tariffs on imports? Some might argue it is.
An X post shares a CNBC clip about the U.S. trade deficit drop.
What Are Tariffs and How Do They Work?
While all the finance-speak might make it sound complicated, tariffs are not a common concept in global trade.
According to Oxford Economics, “tariffs are taxes imposed by a government on goods and services imported from other countries.” It is “like an extra cost added to foreign products when they enter the country. They’re usually a percentage of the price of the goods. The level of the tariff will affect the significance of its impacts.”
The website states that governments might impose tariffs for a variety of reasons, such as to raise government revenue, protect domestic industries and correct trade imbalances. It can also serve as a tool for political negotiations between countries.
Since his second presidential term, Trump has increased tariffs on several countries, including Canada, Mexico, China and India.
An X user shares update on Donald Trump's decision to impose 50 percent tariffs on countries supplying weapons to Iran.
Reactions to Trump's Tariffs
Trump’s tariffs have received mixed reactions from U.S. citizens. Most people have expressed frustration over the rising prices of goods while tariffs grow.
In March 2026, The Guardian published a Harris Poll Survey of 2,138 adults, which found that approximately 7 in 10 Americans believe that Trump’s tariffs have increased their cost of living, impacting expenses like groceries, utilities and fuel.
However, the significant dip in the October 2025 figures of the U.S. trade deficit has encouraged support from some people.
“The U.S. appears to be winning the trade war with tariffs curbing the imports of foreign goods, but America’s trading partners are not holding any grudge as they continue to buy more American goods and services,” Chris Rupkey, chief economist at Fwdbonds, told CNBC.
Do you think Trump’s tariffs will narrow down the U.S. trade deficit? Let us know in the comments.