US Current Account Deficit Narrows More than Expected

The United States current account deficit narrowed by $22.8 billion, or 9.2%, to $226.4 billion in the third quarter of 2025, more than market expectations of a $238 billion deficit. The reduction in the gap was mostly due to a narrowing in the goods deficit to $267.4 billion from $270.4 billion after firms pared back on imports after front-loading foreign purchases to dodge aggressive tariffs passed by the US Presidential Administration. In the meantime, the services surplus expanded to $89.2 billion from $80.6 billion. The primary account swung to a surplus of $5.2 billion from a deficit of $5.8 billion and the secondary income deficit narrowed slightly to $53.5 billion from $53.6 billion.

The United States current account deficit narrowed by $188.5 billion, or 42.9%, to $251.3 billion from the record-high gap in the previous quarter in the second quarter of 2025, broadly aligned with market expectations of a $250 billion deficit. The reduction in the gap was mostly due to a narrowing in the goods deficit to $270.0 billion from $265.8 billion after firms pared back on imports after front-loading foreign purchases to dodge aggressive tariffs passed by the US Presidential Administration. In the meantime, the services surplus was marginally lower at $79.6 billion from $80.3 billion. The primary account deficit widened to $7.7 billion from $2.6 billion and the secondary income deficit widened to $53.2 billion from $51.7 billion.

The US current account deficit widened by $138.2 billion, or 44.3%, to $450.2 billion in Q1 2025, up from a revised Q4 deficit of $312 billion and worse than the market expectation of a $443.3 billion gap. The goods deficit rose to $466 billion from $328.9 billion, as imports increased $158.2 billion to $1 trillion, led by nonmonetary gold and consumer goods, mostly medicinal, dental, and pharmaceutical products. Exports increased $21.1 billion to $539 billion, led by capital goods, mainly civilian aircraft and computer accessories, peripherals, and parts. Also, the services surplus narrowed to $75.4 billion from $78 billion, and the primary income balance shifted to a deficit of $7.6 billion from a $1.6 billion surplus in the previous period, due to a decrease in direct investment income, mostly earnings. Meanwhile, the secondary income shortfall fell to $52 billion from $62.6 billion.