Trump's tariffs fail to cut US trade deficit, IW report shows
SPY•A German Economic Institute study found that the U.S. goods trade deficit reached $130 billion in August, above its level two years earlier despite sweeping tariffs. It also reported weaker foreign investment inflows and shifts in the deficit's shares for the EU and China.
1. Deficit remains high
The study found that the U.S. goods trade deficit reached $130 billion in August, exceeding its level two years earlier despite sweeping import tariffs. The EU's share of the deficit fell to 7% from 20% in August 2024, while China's share declined to 14% from 29%.
2. Mixed economic results
The report said GDP growth remained solid and AI-related investment was buoyant, while job creation lagged the prior administration and inflation remained above the Federal Reserve's 2% target. Foreign direct investment inflows fell 8.2% to $248 billion in 2025, 18% below the 2015–2024 average.
3. Debt and interest rates
The report said the U.S.-Israeli war against Iran was increasing already high public debt and pushing up interest rates, with creditors questioning whether the U.S. could sustain its $40 trillion in outstanding debt.
