Even as U.S. Global Trade Deficit Is Down, the Q1 Manufactured Goods Deficit Is Up Compared to Before Trump’s Second Term and Manufacturing Jobs Are Down
Since hitting the campaign trail again in 2024, Donald Trump has promised to lower the U.S. trade deficit with goals of rebuilding U.S. manufacturing and creating more American industrial jobs. With trade and manufacturing data now available for Q1 2026, we can begin to see how his policies are affecting key trade and manufacturing indicators and measure outcomes against his April 2 “Liberation Day” tariff announcement promise that “jobs and factories will come roaring back into our country.”
After a $63 billion increase in the U.S. manufactured goods trade deficit and the loss of 89,000 more American manufacturing jobs in 2025, the Q1 2026 data show minor gains in trade and manufacturing indicators. Manufacturing employment grew by 11,000 jobs in Q1 2026, but it is still down 82,000 from when Trump was inaugurated for his second term and down 312,000 compared to the 15-year American manufacturing employment peak in January 2023. U.S. shipments of durable goods grew consistently, albeit modestly, throughout 2025 and continued to rise slowly in Q1 2026. The Q1 2026 data show a decrease in the overall U.S. trade deficit, the goods trade deficit, and the manufactured goods trade deficit relative to Q1 2025. Despite these improvements, other measures of manufacturing activity present a more varied picture. Investment in manufacturing capacity, including spending on manufacturing construction, remains in free fall. The Q1 2026 manufactured goods trade deficit is significantly lower than Q1 2025, but higher than Q1 2024. (This is a more accurate comparison given Q1 2025 data were wildly elevated by a flood of pre-tariff imports.) In sum, the data do not show evidence of the broad-based resurgence in U.S. manufacturing promised by Trump, although are modestly improved relative to 2025 measures. (The data in this analysis are inflation-controlled, so some numbers may differ from what you see in the press.)
Total U.S. manufacturing employment reached 12,591,000 employees in March 2026, according to preliminary data from the U.S. Bureau of Labor Statistics. The March report shows a month-over-month increase of 15,000 jobs. However, manufacturing employment declined every month in 2025, rose slightly in January 2026, and fell again in February 2026. The gain in March is not sufficient to reverse the job losses of Trump’s first year in office, let alone approach the 15-year peak of 12,903,000 American manufacturing jobs reached in January 2023. During Trump’s first term, from 2017 to 2019 (excluding 2020 due to pandemic-related job losses), manufacturing employment increased on average more than 36,000 jobs quarter-over-quarter. The quarter-over-quarter growth from Q4 2025 to Q1 2026 was only 11,000 jobs.
The manufactured goods trade deficit was $354.7 billion in Q1 2026, according to data from the U.S. Census Bureau. This deficit is smaller than in Q1 2025, but higher than Q1 2024, and higher than Q1 deficits from 2015 to 2020. (Because importers were rushing in goods to stockpile before tariffs hit, Q1 2025 data are skewed: Q1 2025 includes the only three months in American history with monthly imports of more than $400 billion.) Comparing Q1 2024 to Q1 2026, manufactured goods exports increased $15.6 billion, but the gap widened because manufactured goods imports increased $18.2 billion. After the record-high import flood in Q1 2025, the overall U.S. manufactured goods trade deficit increased $63 billion in 2025 relative to 2024. The increase in the deficit in Q1 2026 relative to Q1 2024 raises questions about whether Trump’s trade policies are actually helping to achieve more balanced trade in manufactured goods.
The overall goods and services trade gap declined to $173.9 billion in Q1 2026 relative to $397 billion in Q1 2025 and $212.2 billion in Q1 2024. This decline is a decrease of 56.2% from Q1 2025 and a decrease of 18% from Q1 2024, based on data from the U.S. Census Bureau. The Q1 decrease represents a decline of $38.3 billion or 13% in the goods deficit and an increase of $21.3 million or 0.03% in the services surplus relative to Q1 2024.
The narrowing of the trade deficit mostly reflects a faster increase in exports when comparing Q1 2026 figures with those from Q1 2024. Goods and services imports in Q1 2026 were $59.4 billion higher than in Q1 2024 (inflation-adjusted), while exports were $97.8 billion higher in Q1 2026 than in Q1 2024.
The Q1 2026 goods trade deficit declined to $257.1 billion in Q1 2026 relative to $480.1 billion in Q1 2025 and $295.4 billion in Q1 2024. This decline is a decrease of 46% from Q1 2025 and a decrease of 13% from Q1 2024, based on data from the U.S. Bureau of Economic Analysis.
It is unsurprising that the trade deficit was much lower in Q1 2026 than Q1 2025 given the surge in imports before Trump’s “Liberation Day” tariffs were imposed in April 2025. Yet the decline relative to Q1 2024 figures could indicate that, after months of record-high tariffs, the Trump administration may be making progress in reducing the large U.S. trade deficit with the rest of the world. Through the rest of 2026, we will be watching quarterly trends to try to ascertain whether the slowdown in imports and faster growth in exports represent lasting trends amid Trump’s shifting trade regime.
However, most of the goods export gains were not related to manufacturing. Increased export value in Q1 2026 relative to Q1 2024 was driven by increased exports of gold, civilian aircraft, and liquefied natural gases — when adjusted for inflation, exports in just these three categories increased by $31 billion. Also, exports of silver have exploded from $218.7 million in Q1 2024 to $4.8 billion in Q1 2026 (an increase of 2,076%). Exports of certain computers and computer parts (HTS 8471) also increased substantially from $4.4 billion in Q1 2024 to $6.8 billion in Q1 2026 (an increase of 56%).
As has been the trend since 2019, a decline in imports from China is being swamped by growing imports from other countries. This resulted in a large U.S. trade deficit with the world in 2025, although the Q1 2026 figure indicates the deficit may be beginning to decline. Chinese manufacturing investment in countries such as Vietnam and Mexico and strategies to ship goods through other countries have created workarounds for Chinese firms to reach U.S. markets.
Comparing Q1 2026 with Q1 2024, the United States imported significantly less from China, Canada, and Ireland while imports increased from ASEAN countries, Taiwan, Mexico, and South Korea. Increased imports from Ireland in 2025 seem to have been a fluke in reaction to repeated Trump threats to impose 100% tariffs on pharmaceuticals. Imports from Taiwan in Q1 jumped 176.9% from 2024 to 2026. In Q1 2026, certain digital processing units (HTS 8471.50.0150) comprised more than half of U.S. imports from Taiwan (in Q1 2024, this tariff code made up only 13.7% of U.S. imports from Taiwan). Imports under this tariff code are very likely core components used to build the servers powering the AI infrastructure now being deployed across the country. Indeed, a recent study by the Federal Reserve Bank of Minneapolis found that, absent the AI boom, the U.S. goods trade deficit in 2025 would have been nearly $200 billion smaller.
After peaking at $253.3 billion (adjusted for inflation) in June 2024, U.S. construction spending in manufacturing declined to $190 billion in March 2026, according to the U.S. Census Bureau. Comparing the seasonally adjusted annual rates for January 2025, the month Trump took office for his second term, and March 2026, construction spending dropped $49 billion, a decline of 20.5%. Construction spending skyrocketed in 2022 and 2023 after the Infrastructure Investment and Jobs Act was signed into law in November 2021 and the Chips and Science Act and Inflation Reduction Act were signed into law in August 2022. Spending on manufacturing construction — including new factories and expanding or updating existing facilities — has fallen month-over-month each month since January 2025, although it rose rapidly in 2022, hit the highest level in 30 years in 2024, and remains at historically high levels. Construction spending in manufacturing was below $200 billion in each of the first three months of 2026 for the first time since February 2023.
The decline in this indicator, along with slow recovery of nondefense capital goods shipments, suggests that manufacturers have slowed or postponed investment projects, likely in response to uncertainty surrounding the volatile tariff outlook.
Durable goods shipments measure the dollar value of products designed to last three years or more sold by U.S. manufacturers. Growth in the U.S. Census Bureau’s “Manufacturers’ Shipments, Inventories, and Orders” data, specifically the “American Manufacturers’ Shipments for Durable Goods” data, can be considered an indicator of growth in manufacturing activity. Durable goods shipments have increased quarter-over-quarter each quarter since Q4 2024, reaching $964.7 billion in Q1 2026, according to the U.S. Census Bureau. Q1 durable goods shipments increased by $40.8 billion (4.4%) from 2025 to 2026. (Some analysts refer to New Orders in the manufacturing report to gauge economic activity. While these are interesting numbers, we believe shipments to provide a more accurate picture of U.S. manufacturing activity given new orders are based on intention to buy and may be canceled.)
The recent positive trend in durable goods shipments means that 2025 levels have surpassed the highs seen in 2022 and 2023 and are approaching the pre-pandemic highs reached in 2018. We will monitor durable goods shipments throughout 2026 to see if the trend continues or if, as tariffs shift, durable goods are sourced from foreign manufacturers instead.
Shipments of nondefense capital goods excluding aircraft also increased in Q1 2026 relative to previous quarters. This data cut captures both equipment and inputs/supply chain purchases, making it a good indicator of investment in productive capacity. These capital goods shipments have increased slightly each quarter since Q4 2024, reaching $240.8 billion in Q1 2026. This is an increase of 3.4% over Q1 2025 shipments. However, the level reached in Q1 2026 is still below the higher value of these shipments attained during the Biden administration from 2021 to 2023, and significantly lower than pre-pandemic shipments. Investment in capital goods is unlikely to trend significantly upward until manufacturers are more certain of future trade and tariff policy.
Until recently, the U.S. manufacturing PMI had been steadily declining during the second Trump administration. A PMI above 50 points indicates the manufacturing economy is expanding while a PMI below 50 points indicates the manufacturing economy is declining. The Institute of Supply Management (ISM) index reached 50.9 points in January 2025 before declining, and remained between 47.9 and 49.1 from March to December 2025. However, in Q1 2026, the PMI maintained an average of 52.6 points, according to Investing.com, which uses data from the ISM Report on Business.
No administration can quickly turn around decades of U.S. trade deficits and deindustrialization. But it is notable that some indicators show slow improvements more than a year into Trump’s second term, while other remain at best mixed. Most notably, manufacturing employment shows worsening outcomes. While the U.S. trade deficit is lower in Q1 2026 relative to Q1 2024, the lack of certainty and stability on tariff rates and coverage likely are having a chilling effect on manufacturing activity and investment as is the termination of Inflation Reduction Act and CHIPS and Science Act industrial policy funding. The increase in the trade deficit for manufactured goods in Q1 2026 relative to Q1 2024 in particular indicates that, while U.S. exports of commodities like metals and liquefied natural gases are increasing, the manufacturing sector may not be benefiting from the Trump administration’s claims of new export market access. As well, to date, the trade “agreements” the administration has announced do not include terms designed to change the underlying causes of surging imports from the countries that are the main sources of the structural imbalance, meaning that these deals do not meet the criteria that would be beneficial in addressing the U.S. trade deficit and deindustrialization.
This page will be updated quarterly (timely release of government data allowing). These data will provide a look at the most important manufacturing indicators and trade and jobs data — including the manufactured goods trade balance — to measure real outcomes against the Trump administration’s promises.
We will continue to carefully track the trend of the U.S. trade deficit, particularly the trade deficit in manufactured goods, in future trade reports to determine if the decrease in Q1 2026 indicates lasting improvement. We will also monitor U.S. manufacturing employment to determine if, as Trump promised, his trade policy will reshore U.S. production and create new jobs.