The Dow Jones (DJIA) opened Tuesday’s trading session in the green as the U.S. trade deficit continued to shrink from President Trump’s trade policies.
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In June, the U.S. overall trade deficit fell by 16% month-over-month to $60.2 billion, ahead of the consensus estimate of $61.0 billion and marking the lowest level since September 2023. Furthermore, June’s goods trade deficit narrowed by 10.8%, also reaching its lowest level since September 2023.
A Lower Trade Deficit Supports GDP
A declining trade deficit boosts gross domestic product (GDP), as imports are subtracted from the calculation while exports are added. For June, exports decreased by 0.5% month-over-month, while imports fell by 3.7%.
Imports falling faster than exports contributed to an advance GDP estimate of 3.0% growth for the second quarter, signaling a significant rebound from the first quarter’s drop of 0.5%. Two consecutive quarters of falling GDP could pose a warning signal for the economy, as it has historically been viewed as a recession indicator.
Despite a falling trade deficit, the Dow Jones is down by 0.14%.
