The United States' trade deficit shrank by nearly 24% in August as imports fell in response to President Donald Trump's sweeping global tariff hikes.

The Commerce Department delayed the report for more than seven weeks due to the federal government shutdown. Released on Wednesday, the report shows that the gap between what the U.S. bought from other countries and what it sold to them fell from $78.2 billion in July to $59.6 billion in August.

Imports of goods and services dropped 5% from July to $340.4 billion. In July, U.S. companies had rapidly stockpiled foreign goods before Trump finalized tariffs on products from almost all countries. These tariffs took effect on August 7.

U.S. exports in August saw a slight 0.1% increase, reaching $280.8 billion.

Trump has long argued that America's persistent trade deficit shows other countries are taking advantage of the United States. He has reversed decades of U.S. free-trade policy by imposing double-digit tariffs on most imported goods and additional duties on specific products such as steel, copper, and automobiles.

However, for 2025 so far, the U.S. trade deficit has actually grown. As of August, it reached $713.6 billion, a 25% increase compared with $571.1 billion during the same period in 2024.

Falling imports and a shrinking trade deficit help boost economic growth because foreign goods subtract from a country's Gross Domestic Product (GDP), which measures the output of domestically produced goods and services.

“The narrower trade gap in August will support stronger real GDP growth in the third quarter, since it means more U.S. spending went toward domestically produced goods and services rather than foreign ones,” Comerica Bank chief economist Bill Adams wrote in a commentary. “Despite the delay in its release caused by the government shutdown, the report still confirms rapid economic expansion in the third quarter.”

Trump has claimed that tariffs would protect American industries and encourage factories to relocate to the U.S., but in reality tariffs are paid by importers, who often pass higher costs on to consumers. Economists say Trump's tariff policies are one factor driving U.S. inflation to remain elevated, consistently above the Federal Reserve's 2% target.

Public frustration over high living costs contributed to a sweeping Democratic victory in the November 4 elections. In response, the president made concessions last week by removing tariffs on beef, coffee, tea, juices, cocoa, spices, bananas, oranges, tomatoes, and certain fertilizers, saying these tariffs “in some cases” may have contributed to price increases.

His tariff policy is also facing legal challenges and is now on appeal before the Supreme Court. During the November 5 hearing, several justices expressed skepticism over whether the president has the authority to bypass Congress and impose unlimited tariffs on most imports simply by declaring a national emergency.