Are shrinking trade deficits disguising deeper risks for consumers and companies? The U.S. trade deficit fell to $60.2B in June, its lowest in nearly two years, thanks to a sharp drop in imports—especially from China, where the gap narrowed ~70% year-over-year. After last winter’s import-rush to beat tariff hikes, the reversal boosted Q2 GDP growth to 3.0% annualized, swinging out of contraction.
But the "tariff effect" is poised for another test. President Trump’s new round—raising average rates to 18.3% (a nine-decade high)—looms for August 7 across allies and rivals alike. Imports from India face a 50% tariff (retaliation over Russian oil ties), while Swiss and Canadian goods also face steep new levies. Even Apple is bracing for a $1.1B quarterly tariff hit.
For consumers and global companies, this means higher costs may soon outpace any GDP boost, reigniting inflation and pressuring corporate margins. As the White House tweaks deadlines and signals deals (especially with China) may be near, volatility remains the only certainty.
