U.S. Trade Deficit With China Shrinks Significantly

The U.S. trade deficit with China has narrowed sharply in recent years. According to data from the U.S. Census Bureau, the goods trade deficit fell from $382 billion in 2022 to $202 billion in 2025. The trend has continued into 2026, with the deficit standing at $33 billion in the first quarter alone.

This decline has been driven primarily by weaker imports of Chinese goods. Imports to the U.S. fell from $536 billion in 2022 to $308 billion in 2025. Exports to China also declined during the same period, dropping from $154 billion to $106 billion, although at a slower pace. As a result, the overall trade gap narrowed despite reduced trade flows in both directions.

China’s export slowdown to the United States during the trade war was partly offset by stronger shipments to other markets, particularly the European Union and ASEAN countries. At the same time, an analysis by the Center for Strategic and International Studies (CSIS) suggests that while the bilateral U.S.-China trade deficit has decreased, the broader U.S. trade imbalance with Asia has not followed the same pattern.

Instead, manufacturing activity and trade flows appear to have shifted toward other Asian economies, including Taiwan, Vietnam, Thailand and India. Between 2018 and 2025, the U.S. trade deficit with Taiwan alone increased by 865 percent, according to the CSIS analysis. The findings suggest that tariffs may have redirected supply chains and trade imbalances rather than substantially reducing their overall scale.

Based on current quarterly figures, the U.S. trade deficit with China could decline further in 2026 and potentially finish well below 2025 levels. However, projections remain uncertain and will depend heavily on future trade dynamics and geopolitical developments over the remainder of the year.

The bilateral goods trade deficit remains one of the central points of tension in U.S.-China economic relations. By contrast, the United States maintains a trade surplus with China in services.

Despite ongoing tariffs and political tensions, economic ties between the U.S. and China remain extensive. Both countries continue to invest heavily in one another through foreign direct investment flows, particularly in sectors such as real estate, transportation, technology and financial services.