President Trump's tariffs have not decreased US trade deficits, German study shows

A German Economic Institute IW study seen by Reuters found that President Trump's tariffs have not reduced the US trade deficit. The US goods trade deficit reached $130 billion in August, exceeding its level two years earlier, despite sweeping import tariffs. Trade patterns shifted, with the EU and China's shares declining.

A study by the German Economic Institute IW, seen by Reuters on Friday, found that President Donald Trump's tariffs have not reduced the US trade deficit. The US goods trade deficit reached $130 billion in August, exceeding its level two years earlier, despite sweeping import tariffs. Trade patterns shifted: the European Union's share of the deficit fell to 7% from 20% in August 2024, and China's share declined to 14% from 29%. Foreign direct investment inflows fell 8.2% to $248 billion in 2025, 18% below the 2015–2024 average. The study noted that GDP growth remained solid and AI-related investment was buoyant, but job creation lagged the prior administration and inflation remained above the Federal Reserve's 2% target. The article also states that the US-Israeli war against Iran is increasing public debt and pushing up interest rates, with creditors questioning US debt sustainability.