In December 2025, the U.S. trade deficit widened sharply to $70.3 billion, reflecting a staggering 32.6% increase from the previous month, as imports surged while exports fell. This increase contributes to a full-year trade deficit of $901.5 billion, a modest decline of only 0.2% from $903.5 billion in 2024. The annual goods trade deficit rose by 2.1% year-on-year to a record $1.24 trillion, despite the widespread imposition of tariffs, according to the U.S. Commerce Department. Notably, the deficit with China narrowed significantly by nearly 32% to a 21-year low of $202 billion, indicating a complex trade relationship as reported by the South China Morning Post on February 20, 2026.