US Trade Gap Takes a Steep Downward Turn

Traders weren't the only ones caught off guard by October's trade numbers. The US trade gap dropped to $29.4 billion in October, its smallest reading since 2009 and about half what Wall Street economists had penciled in, per the Wall Street Journal. Imports fell to $331.4 billion while exports climbed to $302 billion, shrinking the deficit by nearly 40% from September, the Commerce Department reported. The New York Times notes that, due to a spike in imports earlier in 2025, the overall trade gap from January of last year through October rose 7.7% from the previous year.

The surprise wasn't driven by a broad manufacturing boom or a sweeping collapse in demand, but by sharp moves in a few corners of the economy, per the Journal. Exports of gold and other precious metals surged by roughly $10 billion, more than covering the entire month-to-month increase in exports. Financial trading in gold futures has increasingly bled into the physical bullion market, producing occasional spikes that distort trade data.

On the import side, pharmaceutical shipments dropped steeply after President Trump threatened tariffs of up to 100% on drugs from abroad, a warning that likely pushed companies to rejigger their buying schedules. The president has long argued that tariffs can wipe out US trade deficits, framing them as evidence that other nations are exploiting American consumers and businesses. Many economists counter that chasing a zero deficit is misguided and say tariff shocks mostly shift the timing and routing of trade rather than eliminating imbalances.

Over the past year, the deficit has swung widely as firms stockpiled goods ahead of new levies, then pulled back when tariffs hit, then adapted again as policies and trade agreements changed. More volatility could be on the way. The Supreme Court is weighing a challenge to the administration's reliance on the International Emergency Economic Powers Act to impose certain tariffs. A ruling against the White House, which could come as soon as Friday, would hand importers short-term relief—only for a fresh round of uncertainty if officials move to reinstate some barriers under different legal authority. CBS News notes that firms could see billions in refunds for import duties they forked over in 2025, depending on the SCOTUS decision.