Liberation (so to speak) Day, almost a year later
Tariffs and devaluation have not stopped global trade, corrected the goods deficit, or boosted growth. They have, however, taxed Americans, complicated monetary policy, and shifted trade to other countries
2025 was supposed to be the breakthrough year. The year of Donald Trump's tariffs, trade 'Liberation Day', the reversal of globalisation and the end of the US trade deficit (in both goods and services the US has long had a surplus). It was also the year of the nominal devaluation of the dollar, visible both against the major bilateral currencies and in the trade-weighted indices.
The announced liberation consisted of reduced imports, increased exports, and closing the trade hole. The depreciation would have contributed further and manufacturing production would have returned to the US from the rest of the world (i.e. China). The most pessimistic commentators - those for whom the collapse of world capitalism is just around the corner every weekend - had also predicted the sixteenth end of globalisation since 2000.
International trade, spitefully, did not stand still. In 2025, compared to 2024, the level of trade (export+import of goods and services) increased, and not a little. In the first ten months of the year, the increase was more than 6 per cent year-on-year, with services growing even faster than goods. So much for 'de-globalisation': volumes and values have continued to increase, confirming that value chains and trade reorient themselves, but do not evaporate by decree.
In the United States, both exports and imports, by value, increased for both goods and services. The devaluation of the dollar did its job: it supported exports (especially of services) and made imports more expensive. But the net result was not the compression of trade, but its nominal expansion. Businesses continued to buy and sell; they changed suppliers, routes and relative prices, not the fact of trading.
The US trade deficit has not disappeared. On the contrary. In the first ten months of 2025, the total balance (goods+services) worsened compared to the same period in 2024; in the full-year estimate it remains essentially unchanged. Within this picture there is one clear fact: the services surplus has increased, thanks to export growth and the exchange rate effect; but the goods deficit has remained large enough to dominate the total. You can read it two ways, and they both count: comparative advantages created over decades do not disappear for nominal changes of 10-15%, especially if uncertain. And accounting identity has its reasons: without a change in savings and investment flows, tariffs do not 'adjust' balances.
