📍The trade deficit in America in June fell sharply: Are tariffs starting to take effect?

📌 The latest report shows that America's merchandise trade deficit in June was only -$86B, much lower than the forecast of -$98.3B and a decrease from -$95.6B the previous month. This is the largest contraction in many months.

📌 The main reason comes from:
indicating that the import side is tightening more significantly.
Americans are becoming less dependent on goods produced overseas - the goal initially targeted by China is on the right track,
- The automotive industry is also affected, with imports and exports of components and cars both falling sharply according to trailing 3-month data.

The trend to fall the deficit began in the middle of Q2, coinciding with the rounds of US-China trade negotiations and the moment Trump signed new tax imposition orders.

📌 The fall in the deficit may be due to a decrease in consumption of imported goods, which does not mean that Americans have fully switched to using domestic products. The biggest risk is weak consumption, rising prices, and no corresponding substitutes with domestic products; if the domestic supply chain is not strong enough, sooner or later Americans will return to buying imported goods.

📌 But in the short term, this data clearly helps Trump bolster the argument that tariff policy is effective, serving as leverage to continue increasing negotiation pressure on China.