US Trade Deficit Drops to Lowest Level Since 2020.. US Jobless Claims Jump

The U.S. trade deficit narrowed sharply in September 2025, falling to its lowest level in five years as new tariffs imposed by President Donald Trump began reshaping import flows. The deficit declined 10.9% to $52.8 billion, its smallest reading since mid-2020 during the height of the COVID-19 pandemic.

The figures, released by the Department of Commerce, show a notable shift in U.S. trade dynamics as exporters benefited from stronger global demand while importers adjusted to steep, rapidly changing tariff schedules.

U.S. exports rose 3% in September to $289.3 billion, while imports increased only 0.6% to $342.1 billion. The modest growth in imports reflects the impact of fresh, sweeping tariffs applied this year to trading partners including the European Union, Japan, and China.

The new data arrives after a long delay caused by a historic government shutdown that lasted from October through mid-November, which halted the release of key economic indicators and left policymakers and businesses operating without crucial insights into the state of the economy.

Thursday’s report highlighted the continued disruption to trade flows triggered by Trump’s aggressive tariff strategy. Major tariff increases that took effect on August 7 targeted dozens of trading partners, prompting many U.S. importers to stockpile goods in anticipation of further hikes.

Economists at Yale University’s Budget Lab estimate that consumers are now facing the highest effective tariff rate since the 1930s, raising concerns about potential knock-on effects on inflation and consumer spending.

A tit-for-tat tariff escalation between Washington and Beijing earlier this year pushed duties to “exorbitant” levels exceeding 100% on some categories of goods, though both sides have since agreed to a fragile de-escalation.

Trump has also moved to eliminate the “de minimis” exemption that previously allowed low-value shipments to enter the U.S. duty-free, a change that could further lift costs for retailers and consumers.

Despite September’s sharp improvement, analysts caution against reading too much into the headline number. Oliver Allen, chief U.S. economist at Pantheon Macroeconomics, attributed the decline “almost entirely to a large surge in gold bullion exports,” noting that such movements are volatile and unlikely to persist.

Allen expects export momentum to fade in the final quarter of the year and argued that tariffs have “so far failed to generate any meaningful wave of import substitution.”

Commerce Department data also showed that while overall goods imports increased, imports of capital goods, such as computers and electrical equipment, declined, suggesting businesses may be delaying investment amid uncertainty over trade policy.

U.S. Jobless Claims Jump to Highest Level in Four and a Half Years amid Seasonal Volatility

The number of Americans filing new claims for unemployment benefits rose sharply last week, reaching the highest level in roughly four and a half years. However, economists caution that the spike likely reflects seasonal volatility rather than a genuine weakening of the labor market.

The Department of Labor reported on Thursday that initial jobless claims climbed by 44,000 to 236,000 for the week ending December 6, after seasonal adjustment. This represents the largest weekly increase since mid-July 2021, exceeding the Reuters survey consensus of 220,000 claims.

Economists emphasize that early December data are inherently volatile due to the holiday season, and they recommend focusing on the four-week moving average to get a clearer picture of labor market trends. That average rose modestly by 2,000 to 216,750 claims, remaining slightly below its long-term trend.

Stephen Stanley, chief U.S. economist at Santander US Capital Markets, noted: "The vast majority of these weekly swings are seasonal noise. At a fundamental level, nothing has changed. If anything, initial claims are running slightly below the long-term trend, supporting Fed Chair Jerome Powell’s assessment that the labor market is not fragile."

Despite a string of high-profile layoffs, including announcements by Amazon, economists describe the U.S. labor market as one of “no new hiring but also no massive layoffs.” 

Nancy Vanden Houten, chief economist at Oxford Economics, commented: "It is somewhat surprising that recent layoff announcements have not translated into a larger spike in initial claims. Some displaced workers may have received generous severance or found new positions, though this is more challenging in the current environment of slowing hiring."