Walk into a Walmart and pick up a laptop, a microwave oven, a t-shirt or a pair of sneakers: the odds are that it wasn't made in the US, even if it's an American brand. More than 95% of the clothes and shoes Americans buy are imported, and most consumer electronics are manufactured abroad.
When Donald Trump returned to the White House, he promised to rewrite the rules of global trade. Tariffs, he said, would bring factories and jobs back to America, as well as shrink imports and the country’s trade deficit. He made these claims against all historical evidence of what tariffs do (spoiler alert: they don't bring lost jobs back).
As it turns out, the first full year of post-Trump trade data does not have good numbers for the President. US trade didn't fall. Instead, total goods and services traded in 2025 rose more than 5% to $7.8 trillion, despite tariffs and geopolitical uncertainty. And the overall trade deficit narrowed just 0.2%. America changed where it imports from, much more than how much.
This week, the US chose not to renew the United States-Mexico-Canada Agreement (USMCA), opting instead for annual reviews. Killing a trade pact Trump once hailed as "the best agreement we've ever made," signals that the administration continues to be hostile to trade, so much so that even Trump's own trade deals are not safe from the axe.
Mexico and Canada held their positions as the top US trading partners in 2025, accounting for more than a quarter of total goods trade. The bigger changes happened further down the rankings, where China's share continued to shrink while Taiwan and Vietnam became more important to American imports.
America found new partners, who look just like the old partners
Ask most people which country the US imports the most goods from, and many will say China. While trade between the two countries fell nearly 30% in 2025, the US still imports roughly three times more than what it exports to China.
Replacing China didn’t mean bringing production back to the US, as building new factories takes years. Many companies instead scaled up operations in countries such as Vietnam and India, where they already had factories, supplier networks and skilled workers. That helped Vietnam climb from eighth to fifth among America's largest trading partners as imports from Southeast Asia surged.
Some companies also re-routed goods through countries with lower US tariffs before shipping them to America. "Our data suggest there was substantial transshipment last year," said Ebehi Iyoha, Assistant Professor at Harvard, noting that Chinese-owned manufacturers across Asia were well positioned to benefit.
In August last year, Southeast Asian countries, including Thailand and Vietnam, were singled out by Washington for facilitating transshipment of Chinese goods. US monthly trade deficits with Thailand have doubled over the past year and continue to widen. At the same time, Thailand's trade deficit with China has also increased.
The trade deficit changed addresses
Reducing the trade deficit with China was one of Trump's biggest trade goals. By that measure, the policy has made progress, reducing the deficit by around 32%. The more important question, however, is whether America is importing less overall.
So far, the answer is no.
"It is still the case that the US is not self-sufficient in everything," said Monica de Bolle, a senior fellow at the PIEE. "It may be able to export a lot, but it still imports way more than it exports."
As technology companies poured billions into AI infrastructure, US imports of advanced semiconductors and servers surged. Economists at the Minneapolis Fed estimate that, without the AI boom, the US goods trade deficit in 2025 would have been nearly $200 billion smaller.
Looking at goods alone, the US trade deficit increased. Even as imports shifted away from China, the US' goods trade deficit widened 2.1% to a record $1.24 trillion in 2025. Strong services exports kept the overall trade deficit largely unchanged at $902 billion.
Factories haven't come back as quickly
Trump's "Make America Great Again" campaign promised to bring factories back to the US, create more manufacturing jobs and fill store shelves with products that said 'Made in the USA'.
But that golden age is looking elusive, as US manufacturers employed 82,000 fewer workers in March 2026 than when Trump took office in January 2025. While the sector did add 11,000 jobs during the first quarter, it recovered only a small part of the previous year's losses.
Spending on new manufacturing facilities was also 20.5% lower over the same period, reversing part of the construction boom sparked by the Biden-era CHIPS Act and Inflation Reduction Act. Construction spending has fallen every month since Trump returned to office, suggesting companies are becoming more cautious about new factory investments. The manufactured goods trade deficit was 27.7% higher in Q1 2026 than it was two years earlier.
Who ends up paying the tariffs?
US courts struck down key parts of Trump's original tariff programme, forcing the administration to look for other legal options. The White House is now looking to expand Section 301, a trade law typically used against countries accused of unfair trade practices, by opening investigations into around 60 economies.
Many of today’s tariffs were imposed under Section 122, an emergency trade provision that expires later this month, unless the US replaces it with another legal measure.
Even if those tariffs expire, the Budget Lab at Yale estimates consumer prices would still rise 0.5–0.6%. That would reduce the average household's purchasing power by about $650–780 a year.
If legal maneuvering makes the tariffs permanent, prices could rise 0.8–1%, increasing that annual cost to $1,130–1,340. Lower-income households would be hit the hardest because they spend a larger share of their income on imported goods.
The next phase of Trump's trade strategy will be judged less by where America buys its goods and more by what happens at home: whether factories return, and if consumers can avoid higher prices.
