The gold "hoarding craze" subsides, and the U.S. trade deficit in September drops to a five-year low

Data from the U.S. Department of Commerce shows that in September, the U.S. trade deficit narrowed to its lowest level in five years, primarily due to U.S. investors returning gold overseas after a massive import of gold earlier.

At the beginning of the year, amid market speculation that U.S. President Trump’s tariffs on Europe might cover gold, traders rushed to airlift gold bars from Europe to New York. The chaos continued into the summer: the U.S. Customs and Border Protection once stated that Trump’s tariffs on Swiss imports would apply to the widely used 100-ounce and 1-kilogram gold bars. However, just days later, on August 11, Trump stated on Truth Social that gold would not be subject to tariffs.

Grace Zwemmer, an economist at Oxford Economics, noted that in August, “once the market clarified that gold would not be affected by tariffs, the previously surging gold imports quickly reversed.” She attributed the dramatic fluctuations in gold trade this year to safe-haven demand, including the tensions leading up to the potential U.S. government shutdown on October 1.

Gold shipments returning overseas in September surged by $6.1 billion, accounting for the vast majority of the total increase in exports for the month ($8.4 billion). In contrast, gold imports only increased by $1.9 billion.

Stronger exports of consumer goods, including pharmaceuticals, also contributed to the rise in U.S. foreign sales.

In September, U.S. exports grew to $289.3 billion, while imports rose moderately to $342.1 billion. As a result, the trade deficit narrowed to $52.8 billion, down from $59.3 billion in August. This is the lowest level since June 2020, when the COVID-19 pandemic disrupted global supply chains, making it difficult for the U.S. to import goods from abroad.

Trump has consistently described the U.S. trade deficit as “harmful” and views his tariff measures as a solution. However, many economists argue that his premise is flawed. While tariffs can indeed change the flow of imports and exports in the short term, economists point out that a country’s trade balance is ultimately determined by its savings and investment structure.

The surge in gold shipments is just one example of how Trump’s tariffs continue to disrupt the U.S. trade landscape this year. In March, the U.S. goods deficit widened as companies stockpiled imports ahead of the “liberation day” tariffs; then in April, after the 10% global tariffs took effect, the deficit narrowed significantly.

On the import side in September, imports of computers and accessories fell by $2.7 billion. Paul Ashworth, an economist at Capital Economics, stated that this indicates that the construction of artificial intelligence infrastructure may not be as strong as some economists previously expected. If it weren’t for a rebound in pharmaceutical imports of $12.9 billion (due to Trump’s threat to impose tariffs on brand-name drug imports), U.S. goods imports could have dropped to a two-and-a-half-year low.

In the first nine months of this year, the U.S. trade deficit was 17% larger than in the same period of 2024, partly due to U.S. companies stockpiling imported goods ahead of the tariff implementation at the beginning of the year