U.S. Trade Deficit Widens to $57.3B in February 2026, Down 52% Year-Over-Year

The U.S. goods and services trade deficit widened to $57.3 billion in February 2026, up $2.7 billion from a revised $54.7 billion in January — a 4.9% month-over-month increase. Yet the headline number masks a striking structural shift: compared with February 2025, the deficit has shrunk by more than half, down 52.1% year-over-year, as the front-loading of imports ahead of anticipated tariff changes that distorted early 2025 prints has largely unwound. Both exports and imports rose sharply in February, with gross flows climbing to their highest levels on record, making the composition of this deficit — not just its size — the critical signal.

Goods vs. Services: Diverging Balances

The aggregate deficit conceals two very different stories running in parallel. The goods deficit widened $2.5 billion to $84.6 billion in February, driven almost entirely by a surge in goods imports. The services surplus, meanwhile, narrowed slightly to $27.3 billion, down $0.2 billion from January, as import charges for intellectual property climbed $1.0 billion — outpacing the $0.3 billion gain in travel exports and modest increases across financial services and other business services.

Goods trade remains the dominant source of monthly volatility. Goods exports rose $11.5 billion to $206.9 billion, a 5.9% month-over-month gain that set a new series record. The standout driver was industrial supplies and materials, up $10.2 billion, with nonmonetary gold alone accounting for $8.0 billion of that increase. The BEA notes that nonmonetary gold exports are treated differently in the National Economic Accounts — replaced with a production-minus-industrial-use adjustment for GDP purposes — so this surge will not flow through to net exports in the GDP accounts at face value.

On the import side, goods imports rose $14.0 billion to $291.5 billion. Capital goods led the acceleration, up $7.8 billion, with computers ($5.4 billion), computer accessories ($1.5 billion), and semiconductors ($1.1 billion) all posting notable gains. Automotive vehicles, parts, and engines added $1.6 billion, while pharmaceutical preparations contributed $1.0 billion to the consumer goods increase.

The Gross Flow Story: Strong Demand, Rising Supply

The February print is not a story of a narrowing deficit driven by weak domestic demand pulling imports lower — quite the opposite. Both sides of the ledger expanded aggressively:

• Total exports reached $314.8 billion, up $12.6 billion from January, with goods exports at $206.9 billion (up $11.5 billion) and services exports at $107.9 billion (up $1.1 billion)
• Total imports reached $372.1 billion, up $15.2 billion from January, with goods imports at $291.5 billion (up $14.0 billion) and services imports at $80.6 billion (up $1.3 billion)
• Goods exports are up 14.5% year-over-year, while goods imports have fallen 11.0% year-over-year — the structural compression in the annual deficit reflects this asymmetry

The real (inflation-adjusted, 2017 dollars) goods deficit rose just $0.5 billion, or 0.6%, to $83.5 billion — a much smaller increase than the 3.2% nominal widening — suggesting that price effects, particularly in gold and energy, amplified the nominal figures. Real goods exports rose 4.6% and real goods imports rose 3.2%, confirming that volume growth was genuine but more moderate than nominal flows imply.

Trading Partner Highlights

The press release identifies several noteworthy bilateral shifts in February:

• Mexico deficit widened to $16.8 billion, up $4.1 billion, as exports fell $1.7 billion to $31.2 billion while imports rose $2.4 billion to $48.0 billion
• Taiwan deficit widened to $21.1 billion, up $3.8 billion, driven by a $3.0 billion jump in imports to $25.7 billion alongside a $0.8 billion export decline — consistent with the capital goods import surge noted above
• Switzerland surplus expanded to $7.8 billion, up $4.8 billion, largely reflecting the $8.0 billion nonmonetary gold export spike; exports to Switzerland rose $5.9 billion to $12.1 billion

The Taiwan widening warrants attention as a potential leading indicator: the $5.4 billion surge in computer imports and the $1.1 billion gain in semiconductors align precisely with the bilateral deterioration, suggesting continued front-loading of tech hardware ahead of potential policy changes.

Revisions and Outlook

January's trade balance was revised from -$54.5 billion to -$54.7 billion, a modest $0.2 billion deterioration. The revision reflected goods imports being marked up $0.3 billion while goods exports were trimmed $0.1 billion, with services exports revised up $0.2 billion. These are minor adjustments well within the normal revision band.

Looking ahead, the February data carry a direct implication for first-quarter GDP tracking. The three-month moving average deficit stands at $61.6 billion — elevated relative to the sub-$55 billion readings that characterized late 2025 — and the record gross import figure of $372.1 billion will weigh on the net exports component of Q1 GDP. The March 2026 trade report, scheduled for release on May 5, 2026, will be the decisive read: if goods imports remain near February's record pace, the net exports drag on Q1 GDP will deepen; if they retrace alongside any tariff-related pull-forward exhaustion, the drag could prove transitory.